SF 3817

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to aids to local governments; amending the formula for distributing
local government aid to cities; amending Minnesota Statutes 2006, sections
477A.011, subdivision 34, by adding a subdivision; 477A.013, subdivisions 8,
9, as amended; 477A.03, subdivision 2a; repealing Minnesota Statutes 2006,
section 477A.011, subdivisions 30, 31, 32, 33, 38, 39, 40.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 477A.011, is amended by adding a
subdivision to read:

new text begin Subd. 33a. new text end

new text begin CAFR need. new text end

new text begin (a) For cities with a population of 2,500 or more, the
"CAFR need" is equal to the city's total expenses for governmental activities of the
primary government minus expenses financed in that year by:
new text end

new text begin (1) charges for services;
new text end

new text begin (2) operating grants and contributions; and
new text end

new text begin (3) tax increment revenues, including tax increment bond proceeds, to the extent the
expenses, excluding depreciation, are financed by current tax increment revenues.
new text end

new text begin (b) The "CAFR need per capita" for each city with a population of 2,500 or more is
equal to its CAFR need divided by its population.
new text end

new text begin (c) The calculation in paragraph (a) shall use data from the comprehensive annual
financial report of the city filed with the Office of the State Auditor for the most recent
available year as of July 15 of the year in which the aid is to be certified. The commissioner
may adjust the amount calculated under paragraph (a) for errors or omissions as provided
under section 477A.014, subdivision 2. The commissioner shall report any adjustments to
the Office of the State Auditor.
new text end

new text begin (d) The CAFR need per capita under this subdivision for any city may not exceed
the median CAFR need per capita for all cities subject to this subdivision plus an amount
equal to one standard deviation of the CAFR need per capita for all cities subject to this
subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 477A.011, subdivision 34, is amended to read:

Subd. 34.

new text begin Per capita new text end city revenue need.

(a) For a city with a population equal to or
greater than 2,500, " new text begin per capita new text end city revenue need" is deleted text begin the sum of (1) 5.0734098 times the
pre-1940 housing percentage; plus (2) 19.141678 times the population decline percentage;
plus (3) 2504.06334 times the road accidents factor; plus (4) 355.0547; minus (5) the
metropolitan area factor; minus (6) 49.10638 times the household size. deleted text end new text begin equal to:
new text end

new text begin (1) for aids payable in 2009, the city's CAFR need per capita;
new text end

new text begin (2) for aids payable in 2010, the average of the city's CAFR need per capita for
the most recently available two years; and
new text end

new text begin (3) for aids payable in 2011 and thereafter, the average of the city's CAFR need per
capita for the most recently available three years.
new text end

(b) For a city with a population less than 2,500, " new text begin per capita new text end city revenue need"
is deleted text begin the sum of (1) 2.387 times the pre-1940 housing percentage; plus (2) 2.67591 times
the commercial industrial percentage; plus (3) 3.16042 times the population decline
percentage; plus (4) 1.206 times the transformed population; minus (5) 62.772. deleted text end new text begin equal to:
new text end

new text begin (1) for aids payable in 2009, the city's per capita current expenditures on general
government, public safety, and streets and highways;
new text end

new text begin (2) for aids payable in 2010, the average of the city's per capita current expenditures
on general government, public safety, and streets and highways; and
new text end

new text begin (3) for aids payable in 2011 and thereafter, the average of the city's per capita current
expenditures on general government, public safety, and streets and highways, for the
most recently available three years.
new text end

deleted text begin (c) For a city with a population of 2,500 or more and a population in one of the most
recently available five years that was less than 2,500, "city revenue need" is the sum of (1)
its city revenue need calculated under paragraph (a) multiplied by its transition factor;
plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied
by the difference between one and its transition factor. For purposes of this paragraph, a
city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's
population estimate has been 2,500 or more. This provision only applies for aids payable
in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It
applies to any city for aids payable in 2009 and thereafter.
deleted text end

deleted text begin (d) The city revenue need cannot be less than zero.
deleted text end

deleted text begin (e) For calendar year 2005 and subsequent years, the city revenue need for a city,
as determined in paragraphs (a) to (d), is multiplied by the ratio of the annual implicit
price deflator for government consumption expenditures and gross investment for state
and local governments as prepared by the United States Department of Commerce, for
the most recently available year to the 2003 implicit price deflator for state and local
government purchases.
deleted text end

new text begin (c) For purposes of paragraph (b), a city's per capita current expenditures are the
sum of the governmental funds expenditures listed for those purposes, as reported in the
annual state auditor's reports, for the most recently available year as of July 15 of the year
in which the aid is certified, divided by its population. For purposes of this subdivision,
"governmental funds" consist of general funds, special revenue funds, capital projects
funds and debt service funds but exclude enterprise or proprietary funds.
new text end

new text begin (d) For purposes of this subdivision, a city with a population of 2,500 or more that
has not filed sufficient comprehensive annual financial reports with the Office of the State
Auditor to allow its per capita city revenue need to be calculated under paragraph (a) shall
have its per capita city revenue need calculated under paragraph (b).
new text end

new text begin (e) Beginning with aids payable in 2010, no city's per capita revenue need may
increase by more than five percent over its per capita city revenue need in the previous year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:

Subd. 8.

City formula aid.

In calendar year deleted text begin 2004 deleted text end new text begin 2009 new text end and subsequent years, the
formula aid for a city is equal to the need increase percentage multiplied by the difference
between (1) the city's new text begin per capita city new text end revenue need multiplied by its population, and (2) deleted text begin
the sum of deleted text end the city's net tax capacity multiplied by the tax effort rate deleted text begin ; the taconite aids
under sections 298.28 and 298.282 to any city except a city directly impacted by a taconite
mine or plant, multiplied by the following percentages: deleted text end new text begin .
new text end

deleted text begin (i) zero percent for aids payable in 2004;
deleted text end

deleted text begin (ii) 25 percent for aids payable in 2005;
deleted text end

deleted text begin (iii) 50 percent for aids payable in 2006;
deleted text end

deleted text begin (iv) 75 percent for aids payable in 2007; and
deleted text end

deleted text begin (v) 100 percent for aids payable in 2008 and thereafter.
deleted text end

deleted text begin For purposes of this subdivision, "a city directly impacted by a taconite mine or
plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6)
Silver Bay, or (7) Virginia.
deleted text end

No city may have a formula aid amount less than zero. The need increase percentage must
be the same for all cities new text begin with a population of 2,500 or more and the need increase must be
the same for all cities with a population less than 2,500 new text end .

The applicable need increase percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions
4 and 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2009 and thereafter.
new text end

Sec. 4.

Minnesota Statutes 2006, section 477A.013, subdivision 9, as amended by
Laws 2008, chapter 154, article 1, section 3, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year 2009 new text begin and thereafter new text end , each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, new text begin and new text end (2) its city aid base deleted text begin , and (3) one-half of the difference between its total
aid in the previous year under this subdivision and its city aid base in the previous year deleted text end .

(b) For aids payable in deleted text begin 2010 and thereafter, each city shall receive an aid distribution
equal to (1) the city aid formula under subdivision 8, (2) its city aid base, and (3) its
formula aid under subdivision 8 in the previous year, prior to any adjustments under
this subdivision. deleted text end new text begin 2009, the total aid for any city may not be less than 80 percent of its
aid certified in calendar year 2008, minus an amount equal to its aid certified in 2008,
multiplied by the percentage decrease in the limit on the total city aid appropriation, if
any, between aids payable in 2008 and aids payable in 2009 under section 477A.03,
subdivision 2a.
new text end

deleted text begin (c) For aids payable in 2009 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $15 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.
deleted text end

deleted text begin (d) For aids payable in 2009 and thereafter, the total aid for a city with a population
less than 2,500 must not be less than the amount it was certified to receive in the previous
year minus the lesser of $15 multiplied by its population, or five percent of its 2003
certified aid amount.
deleted text end

deleted text begin (e) deleted text end new text begin (c) new text end If a city's net tax capacity used in calculating aid under this section has
decreased in any year by more than 25 percent from its net tax capacity in the previous
year due to property becoming tax-exempt Indian land, the city's maximum allowed aid
increase under paragraph (c) shall be increased by an amount equal to (1) the city's tax
rate in the year of the aid calculation, multiplied by (2) the amount of its net tax capacity
decrease resulting from the property becoming tax exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2008 and thereafter.
new text end

Sec. 5.

Minnesota Statutes 2006, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in 2004, the total aids paid under section
477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the total
aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. For aids
payable in 2006 and thereafter, the total aids paid under section 477A.013, subdivision
9, is limited to $485,052,000. new text begin For aids payable in 2009 and thereafter, the limit on total
aids paid under section 477A.013, subdivision 9, shall be split with 82.4 percent of the
total paid to cities with a population of 2,500 or more, and the remainder paid to cities
with a population less than 2,500.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2008 and thereafter.
new text end

Sec. 6. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 477A.011, subdivisions 30, 31, 32, 33, 38, 39,
and 40, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in
calendar year 2009.
new text end