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89-54 WNITE - CITV CLERK II P��jA -FINANCE ! CITY OF SAINT PAUL Council /� CAf1ARY -OEPARTMENT . �Ja BLUE -MAVOR F1Ie NO. � �� � Ordinance N�. Presented By � Referred To Committee: Date Out of Committee By� Date WHEREAS, the citizens of Saint Paul deserve and receive a high level of qual�ity public services, WHEREAS, Sain�t Paul ' s reliance upon the property tax has increased asla result of federal cutbacks, state funding limitations a�nd a decrease in the local franchise fee , and WHEREAS, in olyder to limit the increase in property taxes, the City has red�ced spending significantly, increased fees and charges, and 'Iaggressively expanded the property tax base, and WHEREAS , thejburden on different classes of property in Saint Paul dc�es not equitably reflect commensurate use of public servic�es, and WHEREAS, the �State Legislature passed property tax reform measures in ]�989 which do not provide enough property tax relief, and I WHEREAS, thelCity of Saint Paul and the Coalition of Greater Minnesota Ciities are cooperating in a joint research effort on property tax$s, and WHEREAS, a p�operty tax reform proposal should meet the following ob,�ectives: * Equi y. Taxpayers should pay similar tax rates for simi�ar levels of service. * Equa ization. Community property tax bases should be equa ized in order to enhance equity. COUNCIL MEMBERS Yeas Nays Requested by Department of: Dimond �� In Favor Goswitz Rettman �be;�� i Against By Sonnen �Ison � Form Approved by City Attorney Adopted by Council: Dat� Certified Passed by Council Se�retary BY By I Approved by Mayor: Date I Approv May f u ' sion to Council ` By I � WMITE - CITV CLERK t PIIy�=.� -�/INANCE I COUlICll /�///��j /� BIUERr-MAVpqTMENT I CITY O� SAINT PAUL File NO.� v ' E 4 L U T I 0 N Ordinance N�. Presented By Referred To Committee: Date Out of Committee Byl Date apartment * Comm rcial and IndustriaL�and non-homestead resi ential property tax rates should be reduced. * Disp rity between tax burdens on high and low value home should be reduced. * Homedwners should continue to receive preferential t r e a m e n t t h r o u g h ��r}.�-�trrrc��rrg--a-sa�_-���_. state property tax relie r rams. law * The tructure of the tax�� should be changed in orde to provide state and local governments with incre�ased budget control and stability. * Long-�term property tax relief. * Retaijn Local Government Aid or provide commensurate fundiing at a stable level . THEREFORE, BE� IT RESOLVED, that the City of Saint Paul support recommendatio s that will meet the objectives described, and directs City obbying staff to work on legislation which will accomplish thbse objectives. � COUNCIL MEMBERS Yeas Nays Requested by Department of: Dimond ��g I—�1 In Favor Goswitz Rettman Scheibel I 8 Against BY Sonnen Wilson Adopted by Council: Date � �e ' � I�89 Form pprov by i Attorney Certified Pass un il Secretl' By � y� . By � Appro y Mayor: Da - Ja�) j ,� 9ci9 Approve Mayo for u m ion to Council B p!lt�,�S}� �.�s;`� �' �. 198� _ _ I w l �,� r �''1"�. II ���j '. 1 WHEREAS , t�he citizens of Saint Paul deserve and receive a high level of �uality public services, WHEREAS, �aint Paul' s reliance upon the property ta�: has increasedIas a result of federal cutbacks, state funding limitatio�j►s and a decrease in the local franchise fee, and WHEREAS, �.n order to limit the increase in property taxes , 'the City has educed spending significantly, increased fees and charges, �nd aggressively expanded the property tax base, and WHEREAS, Ihe burden on different classes of property in Saint Pau� does not equitably reflect commensurate use of public se�vices, and WHEREAS, he State Legislature passed property tax reform measures �n 1989 which do not provide enough property tax relief , a�d M WHEREAS, �he City of Saint Paul and the Coalition of Greater MinnesotalCities are cooperating in a joint research effort on property �axes , and WHEREAS , $ propert�� ta� reform proposal should meet the followinglobjectives: * E uity. Taxpayers should pay similar tax rates for s�milar levels of service. . * E�ualization. Community property tax bases should be e�ualized in order to enhance equity. . I � �' 9-�„� . � � i * Co mercial and Industrial , apartment and non-homestead re�identiai property tax rates should be reduced. * Di�parity between tax burdens on high and low value ho�es should be reduced. * Hotheowners should continue to receive preferential tr�atment through state property tax relief programs. * Th structure of the tax law should be changed in or er to provide state and local governments with in reased budget control and stability. * Lorig-term property tax relief. * Re�.ain Local Government Aid or provide commensurate fur�ding at a stable level . THEREFORE, IBE IT RESOLVED, that the City of Saint Paul support recommendat�ions that will meet the objectives described, and directs City lobbyin� staff to work on legislation which will accomplishlthose objectives. i I I i I I .. . ��--�� � � � � � I WHEREAS , th�e citize ns of Saint Paul deserve and receive a high level of qu�ality public services, WHEREAS, Sajint Paul' s reliance upon the property tax has increased a�s a result of federal cutbacks, state funding limitations� and a decrease in the local franchise fee, and WHEREAS, ir►i order to limit the increase in property taxes, 'the City has re uced spending significantly, increased fees and charges, an�d aggressively expanded the property tax base, and " WHEREAS, th�e burden on different classes of property in Saint Paul �does not equitably reflect commensurate use of public serv�ices, and WHEREAS, th�e State Legislature passed property tax reform measures ini� 1989 which do not provide enough property tax relief, andi WHEREAS , th� City of Saint Paul and the Coalition of Greater Minnesota C�.ties are cooperating in a joint research effort on property ta�Ces , and WHEREAS, a Iroperty tax reform proposal should meet the following o�jectives: * Equ�ty. Taxpayers should pay similar tax rates for sim�lar levels of service. * Equ�lization. Community property tax bases should be equ�lized in order to enhance equity. I�i � , Ili I i i * Com�ercial and Industrial , apartment and non-homestead res�dentiai property tax rates should be reduced. * Disparity between tax burdens on high and low value hom s should be reduced. * Hom owners should continue to receive preferential tre tment through state propert.y tax relief programs,� * The structure of the tax law should be changed in ord�r to provide state and local governments with incneased budget control and stability. * Lon�-term property tax relief. * Ret�in Local Government Aid or provide commensurate � funding at a stable level . THEREFORE, $E IT RESOLVED, that the City of Saint Paul support recommendat�ons that will meet the objectives described, and directs City lobbying staff to work on legislation which will accomplish #hose objectives. I I ��"`-, � � �— " .�� `�� �' GITY OF SAINT PAUL `"`���'"'�1` ' OFFICE OF TAE CITY COUNCIL �e,. .s.9 _ '" ' James Scheibel, Chair Committee of the Whole iDate: January 9, 1989 COMMITTEE REPORT To: SAINT PAUL �ITY COUNCIL From: CITY COUN�IL LEGISLATION COMMITTEE � 1. MSA Street S�andards COMMITTEE RE�OMMENDED APPROVAL 2. Tax Status o� City and HRA-Owned Parking Ramps COMMITTEE RE�OMMENDED APPROVAL (3 - 1 vote) 3. The Year of he City COMMITTEE RE�OMMENDED APPROVAL 4. �, n '�! � �• -�cortrt��r� � ' rt�.xt�;° 5. Fingerprinti�g of Firefighters COMMITTEE RE(�OMMENDED LAYOVER TO A FEBRUARY DATE 6. Bonding Allodation COMMITTEE RE(�OMMENDED APPROVAL �I I CTTY HALL � SEVENTH FLOOR SAINT PAUL, MINNESOTA 55102 Sy�46 .'. ., ' F3RICEING PAP1:R: PPOPERTY TAX REFOR�1 �, � ISSUES ' . ___._ 1988 C�.tv of Saint Paul Action Duringlthe 1988 legislative session, the City undertook the� � first �ffort of its kind by contracting with Briggs and Morgan, the Coalition of Greater Minnesota Cities, and the City o� Minneapolis in order to: design a property tax reform package to present to the 1988 State Legislature, and to analyz the impact of various proposals upon the City of Saint �aul. Although the proposal that the three organi ations presented to the Legislature did not pass in its. . origina�l form, a majority of the goals of the organizations � were m�t. The 1989 and 1990 property tax laws provided prefer ntial treatment for homeowners ; property tax rate � equali�ation was accomplished; burdens on higher valued homes were r duced; and structural reform of the system to provide more s�ability for both the state and local units of government occurred. � � 1988 St�ate Le�islative Action Ma.ior dhan�es to the Pavable 88 Law ( for Pavable 89 ) 1. Ta Ca acities Description: Assessment rates have been replaced by tax capacities. Each class of property is assigned a net � and grolss tax capacity. In most cases, the percentages � have � bee!n set to reflect the effective tax rate (dollar/market .,� value of the property) on property with a 1988 mill rate ' � of 127 . They are not caps or limits, however. ' Im act: There is a substantial tax reduction for homlestead market value between .$68-100 ,000 and the range � for commercial/industrial relief has been extended f rom � thelfirst 560,000 to the first $100 ,000 of market value. _ 2. Tax Ca acit Rates . Descri tion: Mill rates� have been replaced by tax cap city rates, but are expressed as a percentage, i.e. if a c�ity' s levy is 25% of its total (city, county, school dis�trict, etc. ) tax capacity, its new tax capacity rate is 25Ji) . Im ct: If all the taxing jurisdictions ' levies exceed 100 of tax capacity,'� the actual effective tax rates on � various classes of property �.will be higher than the tax cap city rates; if under 100%, the actual effective tax rat�es on the properties will be lower than their tax � � capacity ratios. .. . . . 3 . Disparity Reduction Aid • Des ri tion: Aid is designed to "buy-down" tax rates to I I I .. .. I�ricfi � PaPer. : Property Ta� Reform . - ' ` � p<��;c 2 12 equalized mills (or provide relief for taxin� ` �"'"- jut�isdictions Which have an effective tax rate of more than 1% on the first $68 ,000 of homestead market value) . • Ma ket values and tax rates are adjusted for sales ratios in calculating the aid. Aid is calculated for each taxing di tricl. and is not paid directly to the district. The co nty auditor is instructed to reduce tax rates in that di�trict by the amount of disparity aid allocated, based upon 1988 tax rates and 1988 estimated market values. Im act: Disparity aid is paid to local governments as a re mbursement, like homestead credit. School debt is not in luded in calculating the aid, so it is possible that th re will be effective tax rates �which will exceed tax ' ca�acities. This is the element of the bill that the . Mu#�icipal�.•Legislative Commission (MLC) is suing on comstitutional grounds. The MLC indicates that depending up ' n the community one type of property may receive the pr perty tax relief, whereas the same type of property � lo ated in another community may not. � 4. Lo�al Government Aid De�cription: The LGA formula is redes�gned. An initial "ci.ty revenue guarantp" is calculated based upon city size � (w�th additional assistance for cities outside the metro ar a, cities with declining populations and first class ci ies) . A city revenue amount is also calculated which is the sum of the city' s certified levy 1988 and its 1988 LGt# amount. � '�` Im act: The higher a city's actual revenue, compared to it ' "revenue guaranty, " the lower the aid increase, which is generally 2-9% of total city revenue. A minimum aid in rease of 2% of 1988 LGA is provided to 'those cities � wi h a relatively high tax ca�acity and low revenue gu��anty. - . 5 . Ad itional Equalization Aid . De cri tion: Additional aid is based upon local revenue � ne d and is available to cities with population greater ' th n 2 ,500 . � Im act: Generally available to cities with a below average ($1, 900) tax capacity per household. _ 6. Le Limits � De cri tion: The new levy limit base is equal to the co nties and cities (over 2, 500 ) actual payable .l988 levy : pl s local government aid and exempts pension and debt " se�vice costs and payable 1988 special levies. Base .. in¢reases 4% for 1989 and 59� for 1990. . Im act: Levy increases will be very limited. . i , Bril,e f iei� Paper: Property Taa Peform . . � i�age 3 _ _. _ _ _. _ __. 7. T.a.r�eted Assistance " � Des ri tion: P'or homestead ta�:es payable in 1989 , a . tar eted credit for any increuses of 10% over the net property taxes payable in 1988 of $40 or more is paid by thelstate to the property owner. The refund is equal to ?5%' of L•he amount by which the increase exceeds LO% but . can#�ot exceed $250. Not : The Homestead Credit and Agricultural Credit remain in �lace in payable 1989, except seasonal recreation pro erty does not receive any agricultural aid in payable 198�. The Homestead Credit for payable 1989 keeps $68 ,000 as �he base , but increases the credit from $700 to $?25 . � Pav_ ab1eT1990 Tax Law Chan�es 1. Hom stead �Credit and A ricultural Guarant Eac taxing district is guaranteed that the amount they rec ive from the sum of education aids, transition and � dis�arity aids, local government aid and income mai tenance aids will be greater. than current agricultural and�homestead credits. If aid amounts do not ekceed the gua anteed level, additional aid will be provided. Rep�aces the current h'omestead and agricultural credit . pro rams with an amount that is greater, however, it is -- pai� for by shifts on properties, not by the state. 2 . Tra�sition Aid Fun ing for transition aid comes from the current ' , hom�stead and agricultural credit program and is designed -_ to revent tax burden shifts due to the use of net tax -- cap�cities (starting in 1990 ) rather than gross tat cap�cities . Transition aid is the product of the gross tax 1989 minus ( tax .capacity x homestead effective tax rat� x 103 ) . 3 . Dis �arit Reduction Aid " Amo nt is frozen at 1989 level. • " - "" � 4 . Loc�l Government Aid and Additional Equalization Aid � ' Sam formula as 1989 but increased aid is only one-half of the�increased amount in 1989. " 5 . Wel�are Takeover - ' Adm��nistrative costs for income maintenance will be paid forlby the state. Ttie transition aid amounts received by the counties will be allocated to pay for these income mair�tenance costs. � 6 . Trut�h in Taxation � Taxpayers are to receive early written notification of .. pro�osed levy increases by local• governments and must be giv�n the opportunity to participate in public hearings. I . I . I , ._ ,. BZ icf ' ng Pa.per: Propert-y Tas Ret'orm . , pa�e Q _ _ _ _. � ST-� - � _ State legislation is needed to reform the system. The City of SaintlPaul has participated with the League of Minnesota • Citie�, the Association of Metropolitan Municipalities , the � Associ!ation of Small Cities , the Coalition of Greuter Minnes�ota Cities, the Municipal Legislative Commission, and . � the City of Minneapolis in order to prepare a joint property tax relform position to be presented before the 1989 Legislature. Due to the fact that the suburbs wanted homestead credit reinstated in some dedicated form, and given the fa�ct that the City of Saint Paul and the Coalition of Greater Minnesota Cities focused upon property tax equalilzation, whic:� does not provide direct homestead relief, the efifort was unsuccessful. For the 1989 session, the City of Saint Paul hired Briggs and . Morganl' to provide research and to assist the City and the Coalitlion of Greater Minnesota Cities in identifying a r proper�ty tax reform proposal that was balanced enough to be seriou�sly considered. The Coalition and the City are in the . proces of preparing that reform package; however, discussions focus �pon giving priority to commercial/industrial property, non-ho esteaded residential and apartment pro-perties, as well -- as con�inuing state funding for property "tax ` relief. . ` CITY OF SAINT PAUL POSITION _ . City l�bbs•ing staff is directed to work on such legislation in 1989 . ;..# I • .. . . i . i � I . _ I . . � � . I . . � . I . I I � _ � . I _ . . ;� � . �q-�.y�- . . . _ . . . _ . _ _...__.- _ ._. . . , � . � . . i WHEREASI� the citizens of Saint Paul deserve and receive a high level o� quality public services, WHEREASI� Saint Paul' s reliance upon the property .tax has increas�d as a result of federal cutbacks, state funding limitat ons and a decrease in the local franchise fee, and WHEREAS� in order to limit the increase in property taxes, �the City ha� reduced spending significantly, increased fees and . charges� and aggressively expanded the property tax base, and WHEREAS ! the burden on different classes of property in _ Saint P�ul -does not equitably r.eflect�commensurate use of public �ervices, and WHEREAS � the State Legislature passed property tax reform � measure� in 1989 which do not provide enough property tax relief, land • '�= WHEREASI the City of Saint Paul and the Coalition of Greater Minnesoi�a Cities are cooperating in a joint research effort on propert� taxes, and WHEREAS� a property tax reform proposal should meet the _ followic�g objectives: * I� Equity. Taxpayers should pay similar tax rates for ! similar levels of service. . . . * �IEqualization. Community property tax bases should be ,equalized in order to enhance equity. ~ � � . . .. � �- . . . . . I . . . , i . . r � -.• _ �� . � - � I , . � C mmercial and Industrial and non-homestead � , r�sidential property tax rates should be reduced. * Disparity between tax burdens on high and low value mes.should be reduced. . * Homeowners should continue to receive preferential _ treatment through publiC funding assistance. ' * �he structiire of the tax base should be changed in rder to provide state � and local governments with i'�ncreased budget control and stability. , * Long-term property tax relief. _ * etain Local Government Aid or provide commensurate �unding at a stable level.. � _ THEREFOR�, BE IT RESOLVED, that the City of Saint Paul support "� recommendations that will meet the objectives described, and directs ity �lobbying staff to work on legislation which will accompli�h those objectives. 1Y - I I - _ I �I �