272087 �MHITE - CITV CLERK � � •j�'J���
PINK - FINANCE COI1flC11 iv w
CANARV - DEPARTM T G I TY�� OF SA I NT PAU L
BLUE - MAVOR File NO.
ouncil Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS, the Legislation Committee of the City Council has
studied and considered a number of legislative proposals, and
recommends the adoption of the attached goals and policies as
the City' s 1979 Legislative Program; now, therefore, be it
RESOLVED, that the Council of the City of Saint Paul does
hereby support and adopt as its Legislative Program for the con-
sideration of the 1979 Minnesota Legislature the goals, policies
and programs attached to this Resolution.
COUIVCILMEN Requested by Department of:
Yeas Nays �
Butler
�_ In Favor
Hunt
Levine _ � __ Against BY —
Maddox
Showalter
Tede
Adopted ouncil: Date — p�v 2 � ��� Form Appr �y City At ney
Cer ied Pass y Coun 1 reta)y BY _
1' �
N�V 2 2 � Approved by Mayor for Submission to Council
�.1p by iVlavor. te — ,
B � BY
_�ttBUSH�o DEC 2 t978
., � • I� WV
� CITY OF SAINT PAUL
, , , OFFICE OF THF. CITY COUlYCIL Ht/� yyy......���
�a�� re��exae � / ��
�daaoaesas / �i�
. 3�qg��
RON MADDOX KARL NEID, JR.
Councilman Legislative Aide
November 1.6, 1978
T0: City Council Members
Mayor George Latimer .�
FROM: Ron Maddox, Chairman�� �
Legislation Commi.ttee
,
RE: 1979 City Legislation Package ,�
Attached is the report of the 1979 legislative package as approved by
the Legislation Committee and submitted for your approval at the
Council meeting of Tuesday, November 21, 1978.
Through a lengthy process of receiving proposed topics from all city
departments, Council members, agencies and assoc3ations of simil.ar
munieipal interests and the citizenry, many items were discussed, ,
researched, reviewed and developed by staff of the committee and other �
city personnel. Furthermore, the committee deliberated at twice weekly
meetings over the past two months the findings and adopted the proposed
policies.
Each issue in this report contains a brief background of the 3.ssue and
the adopted policy of the co�ittee. Extensive supplemental material.
is available from my office and the legislative staff.
The report is submitted for your approval and adoption. Other issues
either pending further research or�which may arise at a given point during
the• session will be processed according to proper city policy and through
the committee and Council. If you have any questions, please ca11.
RM:da�
cc: Shelley Wr�ght Binny Miller Diane Lynch
Steve Wellington Alison Echstein Bi11 Buth
John Connelly Barb Gierymski Tom Ryan
Jim Schiebel Press Gary Park
Valerie Cunningham Chief Richard Rowan Janice Rettman
Rose Mix✓ Chief Steve Conroy Karen Christofferson
Suzanne Flinsch Bob Piram Jim 0'Leary
Phil Byrne Bernie Carlson
Alice Murphy Gary Stout
CITY HALL SEVENTH FLOOR SAINT PAUL, MINNESOTA 55102 612/298-4475
�O
a ^�� �
. � . l �1
,";1,��.. - . .. ,•d �,,^, . .
a uun `�
CITY OF SAINT PAUL
INTERDEPARTMENTAL MEMORANDUM
November 16, 1978
TO: COUNCIL PRESIDENT DAVID HOZZA, AND
COUNCIL MEMBERS: ROSALTE L. BUTLER
RUBY HUNT
LEONARD W. LEVINE
RONALD MADDOX
JOANNE SHOWALTER
VICTOR J. TEDESCO
MAYOR GEORGE LATIMER
FR: SHELLEY WRIGHT
5TEPHEN WELLINGTON, MAYOR' S OFFICE
RE: REPORT ON POLICIES ADOPTED BY THE LEGISLATION COMMITTEE
The attached document is a report of the policies adopted by the
Council Legislation Committee at its meetings of October 6, 10,
24 , 31 and November 7.
The report is in summary form with a very brief explanatory
background preceding each policy statement.
Issues which await action of the Legislation Committee are listed
separately. Adopted policies on these remaining issues will be
included in the City's legislative program as they are acted
upon by the Committee and adopted by the Council .
SW/SW:kh
. � � ��2�'���
POLICIES ADOPTED BY THE LEGISLATION COMMZTTEE
TABLE OF CONTENTS
Page
FISCAL AND BUDGETARY ISSUES:
1. Local Government Aid 1
2 . Tax-Exempt Property 2
3. Franchise Fee 2
4 . Title II and Class 3cc Property 3
ECONOMIC DEVELOPMENT ISSUES:
5 Tax Increment Financing 3
6 . Reinvestment Fund 4
PENSION ISSUES:
7. Police and Fire Pensions 4
LAND USE-ENVIRONMENTAL ISSUES:
8. Shade Tree Disease Program 5
9. Como Zoo 6
10 . Gillette State Hospital g
11 . Resource Recovery Facilities �
HOUSING ISSUES :
12 . Housing Discrimination-Families with Children 7
13. Municipal Housing Court g
14 . Denial of Deductibility for Substandard Housing g
ENERGY ISSUES:
15. Utility Shut-Offs - Fuel Subsidy g
16 . Energy Legislation Program g
PUBLIC HEALTH ISSUES :
17. Community Health Services Act 10
18. Vital Statistics Records 10
GENERAL LEGISLATION-ADMINISTRATIVE ISSUES:
19 . Mandatory Stat�e Audit 11
20 . Multi-State Tax Commission 11
21. Port Autharity Investments 12
, PENDING LEGISLATIVE POLICY ISSUES
l. Torrens Property Registration - pending legal opinion.
2. Assessment for operation and maintenance costs for
parking facilities - pending legal opinion.
3. Razing of Hazardous Buildings - pending Council action
and legal opinion.
4 . Emergency Medical Technician Certification - pending
results of Department of Health rule promulgation.
5. Downtown People Mover - pending policy decisions .
6. Contract for Deed Registration - pending further
research. •
7. Corporate Tax Credits for Voluntary Contributions -
pending further research.
8. City Hall/Court House - pending policy direction from
CH/CH Committee ,
9. Civic Center Authority - pending legal opinion regarding
membership.
10. Parking Ticket Violations - pending further research.
. POLICIES ADOPTED BY THE COUNCTL LEGISLATION COMMITTEE
FISCAL AND SUDGETARY ISSUES:
l . LOCAL GOVERNMENT AIDS:
BACKGROUND:
Minnesota ' s program of local government aid has provided .Saint Paul
with considerable financial assistance during a period of high in-
flation and a lagging tax base. State aid now comprises more
than 250 of the revenue supporting basic City services .
The formula that has been relied on for distribution of state aid
has worked to Saint Paul ' s disadvantage. Over the past six to
eight years, the City has consistently used increased state aid
to keep property taxes from rising. This has resulted in a smaller
and smaller share of the total pot allocated to Saint Paul, since �
the distribution formula depends in part on the level of the municipal
mill rate. The more the mill is reduced, the lower the allocation
of state aid. Another difficulty with the formula' s reliance on
the municipal mill rate is that other sources of revenue are ex-
cluded. The formula 's tax effort factor, the mill rate , onl�
neasures local property tax. support. Finally, it is evident that
the population factor relied on in the formula does not adequately
reflect service costs. Saint Paul ' s recent population decline has
not led to reduced costs or a lowered tax burden, in fact, it may
have led to higher fiscal pressures. An adjustment of the popula-
tion factor is needed to more adequately reflect the relationship
between the City's socio-economic condition and its need for state
assistance.
POLICY:
The total amount of state-raised revenue appropriated for property
tax relief through the local government aid program should be in-
creased in 1979 and 1980 in amounts at least sufficient to hold
property taxes at current levels.
The formula for distribution of state aids should also be revised
to more equitably reflect Saint Paul ' s service needs and fiscal
capacity:
* The City should not end up with a reduced state aid allo-
cation if it decides to lower property taxes as a result
of increased state assistance;
* The distribution formula should continue to work toward
the objective of reducing property tax disparities between
Saint Paul and other municipalities in the metropolitan area;
* The distribution formula should also recognize that population
� � Page 2
is an inadequate measure of service need and that other
socio-economic characteristics contribute to differences
in service need and property tax burden.
2 . TAX-EXEMPT PROPERTY:
BACKGROUND:
The practice and public policy of granting exemptions from local
property taxes affects Saint Paul in a number of important ways.
The City provides services to tax-exempt properties without
adequate compensation commensurate with the taxes foregone.
Available data indicates that the increase in market value of
tax-exempt properties compared to taxable properties, the high
percentage of exempt property serving regional and statewide
functions borne by the local taxpayer, and the high concentration �
of these properties in an urban area, contribute to the need to
explore alternatives to the current practice..
POLICY:
Saint Paul, therefore, supPorts ]_egislation which provides reimburse-
ment to local units of government for the cost of services to tax-
exempt properties.
3. FRANCHISE FEE:
BACKGROUND:
The franchise fee is an important source of revenue for Saint Paul .
An estimated $11.1 million will be generated in 1979 . This comprises
12. 80 of the general fund budget. The franchise fee is the only
source of local revenue which is capable of growing at or above
the rate of inflation.
A strong argument in favor of the franchise fee is that it applies
to both taxable and tax-exempt properties alike. The disadvantag�
of this form of revenue is that it is based on energy consumption
which may be proportionately higher for lower-income residents.
In order to reduce this burden, consideration has been given to
either gradual reduction or .elimination of the fee . The reduction
or elimination of the fee, however, would increase Saint Paul ' s
dependence on the property tax as a source of revenue.
The City has the ability to lower the franchise fee by ordinance
from its present 80 level to 5o without a charter change, or below
5% with a charter revision.
����.��� Page 3
POLICY:
The City of Saint Paul recommends that the franchise fee issue
can be addressed at the local. level as a part of the City' s annual
budget process. If the legislature initiates an effort to lower
the franchise fee, the City would not be able to support such an
effort unless an alternate form of replacement revenue were pro-
vided. The franchise fee is currently under study and discussion
in the Council Finance Committee, It is suggested that the
Finance Committee take action expeditiously on recommendations re-
lating to the franchise fee.
4 . TITLE II .AND CLASS 3cc PROPERTY:
BACKGROUND:
These property classifications receive preferential assessments
under the state statutes which govern the property tax classifi-
cation system. Title II property includes private housing which
is utilized for persons receiving housing subsidies from the
federal government. Such propert�y is assessed at a 20o rate
instead of the normal 40o which results in a substantially lower
tax bill . This tax subsidy is provided by the local government
which must depend on the property tax base and not by the state.
Class 3cc property includes the blind and handicapped classifications.
These individuals are assessed at a 5o rate instead of the normal
20�/33o rate.
POLICY:
Homesteads in classification 3cc should be assessed at the same
rate as other homesteads, and federally or state subsidized
housing units in the un-numbered classification should be assessed
at the same rates as comparable housing units that are not subsi-
dized. Additionally, the state should reimburse the property owner
or the renter through an income tax credit or rebate.
ECONOMIC DEVELOPMENT ISSUES:
5. TAX INCREMENT FINANCING:
BACKGROUND:
Tax increr�ent financing is a development technique which is important
to maintain as a method to redevelop and rehabilitate older cities
such as Saint Paul. When this financing method is used appropriately,
it represents a feasible and effective strategy for preservation
• . . Page 4
and expansion of a city' s employment and tax base .
POLICY:
a. Tax increment financing should be maintained as an effective
method to strengthen Saint Paul ' s employment and tax base
and as a means to carry out redevelopment and rehabilitation
of substandard properties.
b. Legislation should be developed which provides reasonable
safeguards on the use of tax increment financing.
6 . REINVESTMENT FUND:
BACKGROUND:
The establishment of a reinvestment fund would complement tax
increment financing by providing "front-end" financial assistance,
when increments for such projects are always smallest. The re-
investment fund could not be suppor�ed, however, as a complete sub-
stitute for tax increment financing, since the preservation of
. local control of economic developme^� projects is essential .
The form of financial assistance co:;ld include both direct and
grants-in-aid as well as low-interest loans. Sources of financial
support could include both revenue bonds and general appropriations.
POLICY:
a. The state should establish a reinvestment fund to provide
financial assistance to older c_ties in Minnesota redevelop-
ment and rehabilitation of comm�rcial/industrial property.
b, This fund should be established to work effectively in tandem
with tax increment financing.
PENSION ISSUES:
7 . POLICE AND FIRE PENSIONS :
BACKGROUND:
The costs of police and fire pensio^s represents a substantial
portion of the City' s budget. In 1979 , $6 . 2 million will be
required to support the Police and rire Relief Associations.
This amaunt translates into 6 . 8 mills in local property taxes .
A substantial portion of the costs oF the police and fire pension
Page 5
programs is related not to the benefits provided, but rather to
the unfunded liabilities incurred over the years for the two
funds. In 1969 , the Legislature required the City to switch
from a "pay-as-you-go" system to a program where every year tax
dollars are used to offset the unfunded liabilities . This prograM
has substantially improved the fiscal status of the two funds, but
has also resulted in substantial increases in property taxes,
POLICY:
The City of Saint Paul supports the efforts of the Police and
Fire Pension Task Force of the Legislative Retirement Commission
to develop new legislation for funding of local police and fire
pension programs. The primary objective of this legislation
should be to limit the amount of property taxes needed to support
these pension programs to the amount required in 1980.
To accomplish this objective the Task Force may need to recommend
changes in:
a. State Aid
b. Funding of unfunded liabilities
c. Employee contributions
d. Benefit escalation provisions (for new members only)
e. Retirement age (for new members only)
f. Relationship between PERA and local plans .
Before any new legislation is adopted, the City should be provided
with an analysis of the full cost impact of any proposed legislative
changes.
LAi�tD USE AND ENVIRONMENTAL ISSUES:
8 . SHADE TREE PROGRAM:
BACKGROUND:
Saint Paul ' s Shade Tree Program is an ongoing project and continues
to be a major priority for the City.
Dutch Elm disease is no longer simply a local probler.: and the
City cannot depend entirely on local resources to fund the program.
Revenues for 1979-1980 should be derived from sources which will
minimize the effect on the tax levy. Saint Paul ' s incidence of
shade tree disease is on the decline. Continued assistance to
local governments , however, is crucial .
POLICY:
The City supports re-enactment of legislation in 1979 which provides:
� � • Page 6
������
a. Funding for costs of the sanitation and removal program
at the 45% reimbursement level.
b. Funding for costs of the reforestation proqram at the
50s reimbursement level.
c. Funding for extended maintenance of newly-planted trees
at a 50% reimbursement level.
d. Funding for experimental grants for wood utilization and
disposal systems at a 50s reimbursement level .
It is recommended that the City work cooperatively with the State
Department of Agriculture and the Shade Tree Advisory Committee
in the development of statewide shade tree legislation for 1979 .
9 . COMO ZOO:
BACKGROUND:
Appropriations. for the renovation and construction of Como Zoo
will be released in two phases . In September of this year the
Metropolitan Council approved the funding of $3. 3 million for
Phase I of the project. Funding for Phase II is estimated at
$5. 0 million.
POLICY:
The City of Saint Paul supports the legislative recommendations of
the Metropolitan Council ' s proposed 1979-1980 Capital Improvement
Program for Regional Recreation Open Space , and specifically
endorses the inclusion of $5. 0 million funding in 1979 for the
Como Zoo Project,
10 . GILLETTE HOSPITAL SITE :
BACKGROUND:
The State currently owns the 13 . 3 acre Gillette Hospital site
which is adjacent to Phalen Park. The City is exploring the
possibility of multiple use for the site. Options include use
for park land as an addition to Phalen Park, or a multiple use
project which incorporates a limited area of the site for housing
and a major portion of the site for inclusion to Phalen Park.
. . Page 7
POLICY:
In order to facilitate actions after a decision is reached on
the use of the Gillette site, it is recommended that the City
support an amendment to 1978 Session Laws, Chapter 791 , Section
20, which will allow the State to transfer the Gillette property
to the City of Saint Paul. The City also supports inclusion
of $150 , 000 in the Metropolitan Parks Commission Capital
Improvement Program for acquisition of the property.
11 . RESOURCE RECOVERY FACILITIES :
BACKGROUND:
Recent proposals have suggested that the Metropolitan Council be
given the authority to establish districts wherein all waste would
be delivered to a resource recovery system. This so-called
"positive districting power" would permit the developer to present
a proposal to the Metropolitan Council instead of having to
negotiate with a number of different municipalities and independent
solid waste haulers. 6dhile passage of such legislation would not
ensure the viability of resource recovery facilities, it would
settle one very important issue.
POLICY :
The City of Saint Paul supports passage of legislation which
would provide the Metropolitan Council with positive districting
powers for solid waste disposal .
HOUSING ISSUES:
12 . HOUSING DISCRIMINATION AGAINST FAMILIES WITH CHILDREN: �
POLICY:
The City of Saint Paul urges the Legislature to amend the Human
Rights Act so as to prohibit discrimination against families with
children in housing. The amended act may properly exempt senior
citizen housing and rationally-based non-arbitrary discrimination
related to the suitability of the housing for families.
� , Page 8
13. MUNICIPAL HOUSING COURT:
BACKGROUND:
Housing is one of the basic rights of individuals in our society.
It is also one of the most complex issues in the City of Saint Paul
since solutions to housing problems must be addressed from a
legal, social and econamic standpoint.
Saint Paul currently has a housing shortage which has reached
crisis proportions . Public housing units are operating with a
zero vacancy rate and there are long waiting lists for housing
as it becomes available .
There appears to be a need for a comprehensive method for solving
housing difficulties. The establishment of a housing court
division in the municipal courts of Ramsey County could be one
method of addressing the problem.
POLICY:
The City of Saint Paul supports in concept stronqer enforcement
of housing code violations including the development by legislators
and City officials of inethods to alleviate the current problems ,
including examination of. the feasibility of a municipal housi.ng
court.
14 . DENIAL OF DEDUCTIBILITY FOR SUBSTANDARD BUILDINGS :
BACKGROUND:
Under State Law (MS. 290 .101, 1975, Chapter 226) , no person who
receives rental income from a "substandard building" is allowed
to claim state income tax deductions for interest or depreciation
until necessary improvements are made.
The City of Saint Paul is currently working with the State Department
of Revenue to implement this act. This type of enforcement pro-
cedure when combined with methods of financial assistance to building
owners can improve the quality and availability of rental housing.
The existing statute will expire on December 31 , 1979, unless
extended.
POLICY:
The City of Saint Paul supports the extension of legislation re-
lating to the denial of deductibility for substandard buildings.
The termination date should be removed from the legislation.
. , Page 9
� The City also recommends that this legislation be enacted by
Congress and be administered through the Internal Revenue
Service .
ENERGY ISSUES :
15 . UTILITY SHUT-UFFS :
BACKGROUND:
Last year approximately 5,000 households faced termination of
their utility services. They were assisted through the combined
efforts of Ramsey Action Programs, the Saint Paul Chapter of the
American Red Cross and the City of Saint Paul . The majority of
these households were either senior citizens on fixed incomes or
families whose incomes classify them as "working poor. "
Although the federal Community Services Administration appropriated
many of the funds used by citizens who needed assistance with
utility bills, there are no new funds projected from the federal
government for the coming year. Northern States Power, however,
has indicated that it will continue its policy to terminate services
for persons unable to pay.
POLICY:
In view of the fact that the federal government has not initiated
� legislation or appropriations to establish a mechanism to aid
families who face utility shut-offs, the City of Saint Paul supports
efforts of the Governor and the State Legislature to provid� a
mechanism whereby residents unable to pay for their energy needs
during the winter months wauld be provided a subsidy or credit for
the amount of their utility costs over and above their ability
to pay.
16 . ENERGY LEGISLATION:
Energy continues to be a concern nationally and locally. To meet
the City' s energy needs, the City encourages the following legis-
lation:
POLICY:
a. The proposed omnibus energy bill which gives the governor
special powers in time of an energy emergency and grants him
fuel allocation power.
b. Grants for financial assistance for conversion to coal .
� � Page 10
� c. A grant and loan program for alternative energy. ___
d. Tax credits for energy conservation.
e. Energy requirement for rental property and laws regulating
costs that can be passed on to the tenant.
f. Further development and research on District Heating.
PUBLIC HEALTH ISSUES:
17 . COMMUNITY HEALTH SERVICES:
BACKGROUND:
The Community Health Services Act, passed by the 1976 Legisl.ature,
allocates grants to counties for distribution to municipalities
within the County. Saint Paul ' s allocation is based on a pro-rata
basis among 17 municipalities and the County.
Eighteen programs have been recommended for the City' s Community
Health Services Plan and funding in 1979 . Local matchirig .funds
must be expended in order to benefit fully from the state subsidy.
The revised community health services budget of the City for 1979
is $708, 906 .
POLICY:
The City of Saint Paul supports an increased state appropriation
by the 1979 Legislature to fund the Community Health Services Act.
18 , VITAL STATISTICS RECORDS :
BACKGROUND:
Duplication of local registrars' services between the County of
Ramsey and the City of Saint Paul has existed for some time. Due
to recent state law changes, however, the situation has changed
from permissive to mandatory as to the City' s option to provide
registrar services. Upon close examination there appears to
be no substantive reason why both the County and the City should
act as local registrars.
In the interest of eliminating unnecessary service duplications ,
the Citizens Budget Review Committee recommended that the
' -
�������
Page 11
, .
responsibility for Vital Statistics be the responsibility of
the Clerk of District Court. Another solution, however, might
be the consolidation of the re�istrar service for the County
and the City under the City Public Fiealth Officer's jurisdiction.
POLICY:
The City of Saint Paul supports consolid.ation of the vital
statistics services under one jurisdiction and recommends that
a joint powers agreement between the City and County be pursued.
(No change in state legislation silould be pursued unless the
effort to develop a joint powers agreement proves unsuccessful . )
GENERAL LEGISLATION - ADMINISTRATIVE TSSUES
19. MANDATORY ST�TE AUDIT:
BACKGROUND:
State Ia�,v presently requires that ci.ties of the first: cl.ass rel y "
oi: the S�ace Audi;or to p�rforiii annual ��;dits ot t}i� Ci �y ' s
tinancial accounts. In 1977 , audits �aere performed for the City,
the Fire Relief Association, the Police Relief Association, the Civic
Center, the 6Vater Utility and City Hall and Court Iiouse . These
six audits resulted in a total cost to the City of $80, 983. Tt
is estimated that if the City could bid out such audits to private
industry, that as much as $20, 000 per year could be saved.
POLICY:
The City of Saint Paul supports amending the current law to remove
the mandatory requirement for audits by the State Auditor for
cities of the first class; or mandate that the state pay for
the costs of the audit. It is further recommended that this
policy should extend to the HFtA.
20. MULTI-STATE TAX CO�iMISSION:
BACKGROUti'D:
The Multi-State Tax Com�-nission is a joint agency of 19 states
formed to help the states work together to improve their adminis-
tration of ta}; laws. The Commission also operates z small joint �
auditing program allowing states to zudit. corporate tax and sales •
tax returns .
� . �!r��j�� Page 12
�
Minnesota currently is an associate member of the MTC. Associate
members cannot, however, participate in joint audits, For the
period 1973-1977, Regular Member States collected an additional
$16 , 813,639 in taxes owed by audited corporations for $1 , 385 ,450
in costs. Return to cost ratio is 12 to 1 .
By encouraging uniformity among state corporate tax policies and
effective auditing of multi-state taxpayers , the MTC promotes
stable tax climates needed for business investment.
POLICY:
The City of Saint Paul encourages the Legislature to become Regular
Members of the Multi-state Tax Commission.
21. INVESTMENT IN COMMERCIAL PAPER:
BACKGROUND:
With the significant volume of funds available for investment by
the Port Authority and the need to invest funds for short periods
of t.ime f_rom constructi.on accounts, it would be advantageous if
the Port Authority were able to invest in Commercial Paper. The
Port Authority now is limited to investment in government securities
or Certificates of Deposit when collateralized with government
securities . Commercial Paper and Certificates of Deposit for short-
term investments provide significantly higher interest rates than
the normal federal securities in periods of stable interest rates.
For the Port Authority' s long-term investment program and need to
invest in short term, it would be a significant advantage to have
the statutory changes made to permit investment in Commercial Paper,
both finance or industrial primes, limiting it to Ratings A-1 and
P-1 , and A-2 and P-2,
Certain public agencies have been granted this statutory authority
by the Legislature, i.e. City of St. Cloud., University of Minnesota,
State of Minnesota Investment Board, P�innesota Higher Education
Coordinating Council , and the Metropolitan Airports Commission.
POLICY:
The City of Saint Paul supports an amendment to MS . 1978, Chapter
458 in order to allow the Port Authority to invest its funds in
Commercial Paper.
, .atr:o�
�� � CITY OF SAINT PAUL
� � OFFICE OF THE MAYOR
, � �
+� � h'
....
347 CITY HALL
, (*EOHGE LATIJIE$ SAINT PAi3T.,MINNESOTA SES108
MAYOB (618) 298-4323
� .
�
�
�
� We would like to transmit for your review the City's 1979 Legislative '
Progr�a, receatly adopted by the City Council. We feel that the
proposals contained in the document are both important and realistic
and will help us in our mutual efforts to more effectively address
� Saint Paul's fiscal and economic and social needs.
The program is also ambitious, and while we intend to pursue each issue
� vigorously, we recognize the importance of priorities. The program
contains 21 separate issues; of these, 8 deserve particular emphasis.
� Legislative Priorities
Statewide Issues Local/Metro Issues
� lst priority Local Government Aid Como Zoo
Downtown People Mover
(pending)
, 2nd priority Police & Fire Pensions Gillette Hospital Site
Shade Tree Disease Program Denial of Deductibility
� Tax Increment Financing
Oae major issue contained in the above list of priorities is not
� specif ically addressed in the attached legislative program. The
proposed downtown people mover, which is now under study by the
Metropolitan Council, the Metropolitan Transit Commission, and the
City of Saint Paul, may well become a legislative issue for the City
� in 1979. A final decision on whether or not this project will be
presented to the 1979 Legislature is presently awaiting decisions by
the City, the MTC and the Metropolitan Council. We have included a
, brief summary of pertinent facts regarding the DPM for your infor-
mation, since this issue is likely to raise a number of questions
tYiroughout the City in the coming weeks.
,
�
,
,
� Page 2
� We are also including in this packet of information a brief explanation
of the City's financial condition. Many of our legislative requests
� involve providing state financial assistance to the City. In particular,
the Local Goverx�ment Aid program supplies a primary source of revenue to
meet the costs of City services. We feel that the backgound information
on the City�s budget and financial condition will help provide all of you
� with the kind of data necessary to evaluate the requests included in our
legislative program.
� We have attempted to keep the material contained in the legislative program
quite brief. For each of the issues, however, there exists a substantial
amount of supplemented information which we would be happy to share with
� you. Steve Wellington will be coordinating the efforts of City staff '
involved in legislative activities for this session. Please contact Steve
or Shelley Wright (298-4323) if you have any questions.
� During the next 3-4 weeks we are planning to meet with all of the members
of the Ramsey County Delegation either individually or in small groups
to discuss in more detail our legislative program. We appreciate your
� continued assistance and look forward to our joint efforts for a productive
legislative session.
� Sincerelq,
� LAT R
0
�
DA IiOZZA `
� Coun sident
� ALD MADDOX
Chair, Legislation Co�ittee
�
lm
� attaehments
�
�
,
SAINT PP,UL LEGISLATTVE PROGRAN!
�
TABLE OF CONTENTS
�
� P�
FISCAL AND BUDGETARY ISSUES:
1. Local Government Aid 1
2. Tax-Exempt Property 2
� 3. Franchise Fee 2
4. Title II and Class 3cc Property 3
� ECONOMIC DEVELOPPdENT ISSUES:
Tax Increment Financa.ng 4
6. Reinvestment Fund 4
7. Downtown People I�iover 5
� PENSION ISSUES:
. Po ice and Fire Pensions 5
� LAND USE-ENVIRONMENTAL ISSUES:
9. Shade Tree Disease Program 6
10. Cono Zoo 7
, 11. Gillette State Hospital 8
12. Resource Recovery Facilities 8
� HOUSING ISSUES:
Housing Discrimination-Families with Children 9
14. Municipal Housing Court 9
15. Denial of Deductibility for Substandard Housing 9
� 16. Minnesota Housing Finance Agency Programs 10
ENERGY ISSUES:
� . Uti ity Shut�Offs 11
18. Energy Legislation Program 11
� PUBLIC HEP.LTH ISSUES:
19. Community Health Services Act 12
20. Vital Statistics Records 12
� GENERAL LEGISLATION-ADT�INISTP:ATIVS' ISSUES:
1. Mandatory State Au it 13
22, i�lulti-State Tax Commission 14
� 23. Port Authority Investments 14
24. Assessments for Operating Costs of
Public Facilities 15
�
�
�
�
�
�
, FzSCAL A1vD BUDGETARY TSSUES:
1. LOCF.L GOVER�T1�iENT AIDS:
� BACKGROUIID:
� t�inne�ota' s program of local government aid has provided Saint Paul
with considerable financial assistance during a period of high
inflation and a lagging tax base. State aid now comprises more
than 25$ of the revenue supporting basic City services.
� The formula that has been relied on for distribution of state aid
has worked to Saint Paul's disadvantage. Over the past six to
� eight years, the City has consistently used increased state aid to
keep property taxes from rising. This has resulted in a smaller
and smaller share of the total pot allocated to Saint Paul, since
the distribution formula depends in part on the level of the .
� municipal mill rate. The more the mill is reduced, the lower the
allocation of state aid. Another difficulty with the formula' s
reliance on the municipal mill rate is that other sources of
� revenue are excluded. The formula' s tax effort Lactor, the mill
rate, only measures local property tax support. Finally, it is
evident that the population factor relied on in the formula does
not adequately reflect service costs. Saint Paul's recent population
� decline has not led to reduced costs or a lowered tax burden, in
fact, it may have led to higher fiscal pressures. An adjustment
of the population factor is needed to more adequately reflect the
� relationship between the City' s socio-economic condition and its
need for state assistance.
� . POLICY: _
The total amount of state raised revenue appropriated for property
tax relief through the local qovernment aid program should be
� increased in 1979 and 1980 in amounts at least sufficient to hold
property taxes at current levels.
� The formula for distribution of state aids should also be revised
to more equitably reflect Saint Paul' s service needs and fiscal
capacity:
� * The City should not end up with a reduced state aid
allocation if it decides to lower property taxes as a
result of increased state assistance;
� * The distribution formula should continue to work to�aard
the objective of reducing property tax disparities between
Saint Paul and other municipalities in the metropolitan area;
�
�
�
. ,
Page 2 �
* �
The distribution formula should also recognize that
population is an inadequate measure of service need and
that other socio-economic characteristics contribute to �
differences in service need and property tax burden.
�
2. TAX-EXEMPT PROPERTY:
BACKGROUND: �
The practice and public policy of granting exemptions from local �
property taxes affects Saint Paul in a number of important ways.
The City provides services to tax-exempt properties without
adequate compensation commensurate with the taxes foregone. �
Available data indicates that the increase in market value of
tax-exempt properties compared to taxable properties, the high
percentage of exempt property serving regional and statewide
functions borne by the local taxpayer, and the high concentration �
of these properties in an urban area, contribute to the need to
explore alternatives to the current practice.
POLICY: �
Saint Paul, therefore, supports legislation which provides
reimbursement to local units of government for the cost of services �
to tax-exempt properties.
�
3. FRAPICHTSE FEE:
BACKGROUND: �
The franchise fee is an important source of revenue for Saint Paul. �
An estimated $11.1 million will be generated in 1979. This comprises
12. 8� of the general fund budget. The franchise fee is the only
source of local revenue which is capable of growing at or above
the rate of inflation. �
A strong argument in favor of the franchise fee is that it applies
to both taxable and tax-exempt properties alike. The disadvantage �
of this form of revenue is that it is based on energy consumption
which may be proportionately higher for lower-income residents.
In order to reduce this burden, consideration has been given to �
either gradual reduction or elimination of the fee. The reduction
or elimination of the fee, however, would increase Saint Paul' s
dependence on the property tax as a source of revenue.
. �
�
�
Page 4 �
ECONOMIC DEVELOPP�IENT ISSUES: �
5. TAX ID1CFtED�NT FINA.'�ICING: �
BACF:GROUND:
Tax increment financing is a development technique which is important �
to maintain as a method to redevelop and rehabilitate older cities
such as Saint Paul. [�lhen this tinancing method is used appropriately,
it represents a feasible and effective strategy for preservation �
and expansion of a city' s employment and tax base.
POLICY:
a. Tax increment financing should be maintained as an effective � �!
method to strengthen Saint Paul ' s employment and tax base
and as a means to carry out redevelopnent and rehabilitation �
of substandard properties.
b. Legislation should be developed which provides reasonable �
safeguards on the use of tax increment financing.
�
6. REINVESTMENT FUND:
BACKGROUND: �
The establishment of a reinvestment fund would complement tax
increment financing by providing "front-end" financial assistance, �
when increments for such projects are always smallest. The
reinvestment fund could not be supported, however, as a complete
substitute for tax increment financing, since the preservation of �
local control of econo�nic development projects is essential.
The forn of fir.ancial assistance could include both direct and
grants-in-aid as well as low-interest loans. Sources of fi�ancial
support could include both revenue bonds and general appropriations. �
POLICY: �
a. The state should establish a reinvestment fund �o provide �
financial assistance to older cities in I�iinnesota redevelop-
ment and rehabilitation of commercial/industrial property.
�. This fund should be established to work effectively in tandem �
with tax increment financing.
�
�
�
�
� Page 3
� The City has the abili.ty to lower the franchise fee by ordinance
from its present 8$ level to 5$ without a charter change, or below
5$ with a charter revision.
� POLTCY:
� The City of Saint Paul recommends that the franchise fee issue
can be addressed at the local level as a part of the City's annual
budget process. Tf the legislature initiates an effort to lower
� the franchise fee, the City would not be able to support such an
effort unless an alternate form of replacement revenue were
provided. The franchise fee is currently under study and discussion
in the Council Finance Committee. It is suggested that the Finance
� Committee take action expeditiously on recommendations relating to
, the franchise fee.
�
4. TITLE II AND CLASS 3cc PROPERTY:
, BACKGROUND:
� These property classifications receive preferential assessments
under the state statutes which govern the property tax classification
system. Title II property includes private housing which is
� utilized for persons receiving housing subsidies from the federal
government. Such property is assessed at a 20� rate instead of the
normal 40� which results in a substantially lower tax bill. This
tax subsidy is provided by the local government, which must depend
� on the property tax base, and not by the state. Class 3cc property
includes the blind and handicapped classifications. These
individuals are assessed at a 5� rate instead of the normal 20$/33�
� rate.
POLICY:
� Homesteads in classification 3cc should be assessed at the same
rate as other homesteads, and federally or state subsidized
housing units in the un-numbered classification should be assessed
� at the same rates as comparable housing units that are not
subsidized. Additionally, the state should reimburse the property
owner or the renter through an income tax credit or rebate.
�
�
�
�
�
Page 6 �
programs is related not to the benefits provided, but rather r
to the unfunded liabilities incurred over the years for the two
funds. In 1969, the Legislature required the City to switch �
from a "pay-as-you-go" system to a program where every year tax
dollars are used to offset the unfunded liabilities. This
program has substantially improved the fiscal status of the two
funds, but has also resulted in substantial increases in �
property taxes.
POLICY: �
The City of Saint Paul supports the efforts of the Police and
Fire Pension Task Force of the Legislative Retirement Commission
to develop new legislation for funding of local police and fire �
pension programs. The primary objective of this legislation
should be to limit the amount of property taxes needed to support
these pension programs to the amount required in 1980. �
To accomplish this objective the Task Force may need to recommend
changes in:
a. State Aid �
b. Funding of unfunded liabilities
c. Employee contributions �
d. Benefit escalation provisions (for new members only)
e. Retirement age (for new members only)
f. Relationship between PERA and local plans. �
Before an� new legislation is adopted, the City should be provided
with an analysis of the full cost impact of any proposed legislative
changes. �
LAND USE AND ENVI�tONI�'iENTAL ISSU�S: �
9. SHADE fiREE PROGRAM: �
BACKGROUND:
Saint Paul' s Shade Tree Program is an ongoing project and continues �
to be a major priority for the City.
Dutch Elm disease is no longer simply a local problem and the �
City cannot depend entirely on local resources to iund the program.
Revenues for 1979-1980 should be derived from sources which will
�
�
�
�
� Page 5
, • 7. DOti�INTOWN PEOPLE MOVER:
� BACKGROUND:
The proposed Downtown People Mover (DPM) is a transit system
proposed for downtown Saint Paul. Automated vehicles would
� travel on a fixed guideway connecting major downtawn activity
centers such as the Civic Center, the State Capitol, 7th Place,
Lowertown, the Science Museum, and Rice Park. The federal
� Urban P�Iass Transit Administration has selected Saint Paul as
one of four cities eligible for federal funding for construction
of such a transit system.
� The 1977 t�iinnesota Legislature established a Steering Committee
for the DPb: project, which has conducted an extensive feasibility
study during the past year and one-half. The Steering Committee
� will be forwarding the results of their study for approval by
the City of Saint Paul, the Metropolitan Transit Commission, and
the tietropolitan Council. If all three governmental units agree
� to support the proposed project, legislation will be needed to
provide financial support for the MTC share of the capital costs,
the ability to assess for operating costs, and for local
flexibility in the bidding and procurement area to meet the
� special design requirements of the system.
POLICY:
� The City of Saint Paul authorizes and supports any and all
necessary legislation for implementation of the proposed Downtown
People Mover project.
�
■ PENSION ISSUES:
8. POLICE AND FIRE PENSIONS: �
� BACItGROUND:
� The costs of police and fire pensions represents a substantial
portion of the City's budget. In 1979, $6.2 million will be
rec�uired to support the Police and Fire Relief Associations.
This amount translates into 6. 8 mills in local property taxes.
� A substantial portion of the costs of the police and fire pension
i
�
�
�
� Page 7
� minimize the effect on the tax levy. Saint Paul's incidence of
shade tree disease is on the decline. Continued assistance to
� local governments, however, is crucial.
POLICY:
� ihe City supports re-enactment of legislation in 1979 which
provides:
� a. Funding for costs of the sanitation and removal program
and the reforestation program at a 50� reimbursement level.
b. Funding for extended maintenance of newly-planted trees
� at a 50$ reimbursement level.
c. Funding for experimental grants for wood utilization
� and disposal systems at a 50� reimbursement level. '
It is reconu:�ended that the City work cooperatively with the State
Department of Agriculture and the Shade Tree Advisory Committee
� in the development of statewide shade tree legislation for 1979.
� .
10. COMO Z00:
� BACKGROUIJD:
Appropriations for t�e renovation and construction of Como Zoo
� will be released in two phases. In September 1Q78, the
Metropolitan Council approved the funding of $3. 3 million for
Phase I of the project. Funding for Phase II is estimated at.
$5.0 million.
� POLICY:
� The City of Saint Paul supports the legislative recommendations of
the T�tetropolitan Council's proposed 1979-1980 Capital Improvement
Program for Regional Recreation Open Space, and specifically
� endorses the inclusion of $5.0 million funding in 1979 for the
Como Zoo project.
�
r
�
s
S
Page 8 �
11. C,ILLETTE HO��ZTt'1L SzTE: �
B�CRGROUND; �
The State currently owns the 13. 3 acre Gillette Hospitai site
which is adjacent to Phalen Park, The City is exploring the
possibilzty of multiple use for the site. Options include use �
for park land as an addition to Phalen Park, or a multiple use
project which incorporates a limited area of the site for housing
and a major portion of the site for inclusion to Phalen Park. �
POLICY:
In order to facilitate actions after a decision is reached on �
the use of the Gillette site, it is recommended that the City
support an amendment to 1978 Session Laws, Chapter 791, Section 20,
which will allow the State to transfer tlze Gillette property �
to the Ci.ty of Saint Paul. The City also supports inclusion of
$150,000 in the Aietropolitan Parks Commission Capital Improvement
Program for acqui.sitYOn of the property.
�
12. RESOURCE RECOVERY FACILITIES: �
BACKGROUND: �
Recent proposals have suggested that the Metropolitan Council be
given the authority to establish districts wherein all waste
would be delivered to a resource recovery system. This so-called �
"positive districting power" would permit the developer to
present a proposal to the Metropolitan Council instead of having
to negotiate with a number of different municipalities and �
independent solid waste hauZers. While passage of such legislation
would not ensure the viability of resource recovery facilities,
it would settle one very important issue.
POLICY: �
The City of Saint Paul supports passage of legislation which �
would provide the rTetropolitan Council with positive districting
powers for solid waste disposal.
�
�
�
�
�
Page 9
�
� HOUSING ISSUES:
� 13. HOUSING DISCRIMINATI0�1 AGP,INST FAMILIES WITH CHILDREN:
POLICY:
� The City of Saint Paul urges the Legislature to amend the Human
Rights Act so as to prohibit discrimination against families with
children in housing. The amended act may properly exempt senior
� citizen housing and rationally--based non-arbitrary discrimination
related to the suitability of the housing for families.
�
14. MUNICIPAL. HOUSZNG COURT:
� BACKGFtOUND:
Housing is one of the basic rights of individuals in our societ�.
� It is also one of the most complex issues in the City of Saint Paul
since solutions to housing problems must be addressed from a
legal, social and economic standpoint.
� Saint Paul currently has a housing shortage which has reached
crisis proportions. Public housing units are operating with a
zero vacancy rate and there are long waiting lists for housing
� as it becomes available.
There appears to be a need for a comprehensive method for solving
� housing difficulties. The establishment of a housing court
division in the municipal courts of Ramsey County could be one
method of addressing the problem.
� POLICY:
The City of Saint Paul supports in concept stronger enforcement
� of housing code violations including the development by legislators
and City officials of inethods to alleviate the current problems,
including examination of the feasibility of a municipal housing
� court.
� 15. DENIAL OF DEDUCTIBILITY FOR SUBSTANDARD BUILDINGS:
BACKGROUND:
, Under State Law (M.S, 290.101, 1975, Chapter 226) , no person who
receives rental income from a "substandard building" is allowed
�
�
�
Page 10
�
to claim state income tax deductions for interest or depreciation �
until necessary improvements are made.
The City of Saint Paul is currently working with the State �
Department of Revenue to implement this act. This type of
enforcement procedure, when combined with methods of financial
assistance to building owners, can improve the quality and �
availability of rental housing. The existing statute will expire
on December 31, 1979, unless extended.
POLTCY: �
The City of Saint Paul supports the extension of legislation
relating to the denial of deductibility for substandard buildings. �
The termination date should be removed from the legislation.
The City also recommends that this legislation be enacted by
Congress and be administered through the Internal Revenue Service. �
16. bTINNESOTA HOUSING FINANCE AGENCY PROGR�NiS: �
BACKGROtJDTD: �
The City of Saint Paul reiies heavily on the financial support
of the Aiinnesota Housing Finance Agency to carry out its housing
programs. This assistance is important not only for construction �
of new housing units for low and moderate income persons, but
also for the City' s housing rehabilitation programs. Funds
provided through MFiFA provide a primary source of assistance for �
the low interest home improvement loans offered to residents of
Saint Paul whose incomes are below $16,000 per year. In �
addition, MHFA provides mortgage financing at below market rates �
to low and moderate income persons purchasing housing in the city.
The legislature will need to increase MHFA' s bonding authority
and appropriation level in order to maintain and expand the
agency's rehabilitation, mortgage, and new construction programs. �
POLICY:
The City of Saint Paul supports increased bonding authority and ,�
increased state appropriations for the Minnesota Housing Finance
Agency. This assistance is needed so that the agency can �
continue to carry out the following programs:
1) to expand the level of assistance provided to low and
moderate income persons for low interest home improvement �
loans;
�
�
�
Page 11
�
� 2) to increase the amount of below market rate mortgage
financing available for home purchase by low to moderate
� income persons;
3) to continue to provide financing for the development of
new housing units for low to moderate income persons.
�
� EPIERGY ISSUES:
17. UTILITY SHUT-OFFS:
� BACKGROUND:
� Last year approximately 5,000 households faced termination of
their utility services. They were assisted through the combined
efforts of Ramsey Action Programs, the Saint Paul Chapter of the
American Red Cross and the City of Saint Paul. The majority of
� these households were either senior citizens on fixed incomes or
families whose incomes classify them as "raorking noor. "
� Although the federal Community Services Administration appropriated
many of the funds used by citizens who needed assistance with
utility bills, there are no new funds projected from the federal
� government for the coming year.
POLICY:
� In view of the fact that the federal government has not initiated
legislation or appropriations to establish a mechanism to aid
families who face utility shut-offs, the City of Saint Paul
� supports efforts of the Governor and the State Legislature to
provide a mechanism whereby residents unable to pay for their
energy needs during the winter months would be provided a subsidy
or credit for the amount of their utility costs over and above
� their ability to pay.
� 18. ENERf;Y LEGISLATION:
� Energy continues to be a concern nationally and locally. To meet
the City' s energy needs, the City encourages the following
legislation:
�
�
�
�
Page 12 �
POLZCX: �
a, The proposed omnibus energy �bill which gives the governor �
special powers in time of an energy emergency and grants
Izim fuel allocation power,
b� Grants for financial assistance for conversion to coal. �
c. A grant and loan program for alternative energy.
d. Tax credits for energy conservation. �
e. Energy requirement for rental property and laws regulating �
costs that can be passed on to the tenant.
f. Further development and research on District Heating. ,
�
PUBLIC HEALTH ISBUES: �
19. CO2�'IUNTTY HEALTH SERVTCES:
BACICGROUND: �
The Community Health Services Act, passed by the 1976 Legislature, �
allocates grants to counties for distribution to municipalities
within the County, Saint Paul' s allocation is based on a pro-rata
basis among 17 municipalities and the County.
Eighteen programs have been recommended for the City' s Community �
Health Services Plan and funding in 1979. Local matching funds
nust be expended in order to benefit fully from the state subsidy. �
The revised community health services budget of the City for 1979
is $708,906.
POLICY: �
The City of Saint Paul supports an increased state appropriation
by the 1979 Legislature to fund the Community Health Services Act. �
20. VITAL STATISTICS F.ECORDS: �
BACKGROUND: �
Duplication of local registrars' services between the County of
Ramsey and the City of Saint Paul has existed for some time. Due
�
�
t
Page 13
�
, to recent state law c:zanges, however, the situation has changed
from permissive to mandatory as to the City' s option to provide
registrar services. Upon close examination there appears to
� be no substantive reason why both the County and the City should
act as local registrars.
� In the interest of eliminating unnecessary service duplications,
the Citizens' Eudget Review Committee recommended that the
responsibility for Vital Statistics be the responsibility of
� the C1erk of District Court. Another solution, however, might
be the consolidation of the registrar service for the County
and the City under the City Public Health Officers ' jurisdiction.
� POLTCY:
The City of Saint Paul supports consolidation of the vital
� statistics services under one jurisdiction and recom�mends that '
a jo�nt powers agreement between tne City and County be pursued.
(No change in state legislation should be pursued unless the
� effort to develop a joint powers agreement proves unsuccessful. )
� GENERAL LEGISLATION - �,D1�4INISTRATIVE ISSUES
� .
21. MANDATORY STATE �UDIT.
� BACKGROUND:
State law presently reguires that cities of the first class rely
� on the Sta,te Auditor to perform annual audits of the City's
financial accounts. In 1977, audits were performed for the City,
the Fire Relief Association, the Police Relief Association, the
Civic Center, the Water Utility and City Hall and Court Fiouse.
� These six audits resulted in a total cost to the City of
$80, 983. It is estimated that if the City could bid out such
audits to private industry, that as much as $20,000 per year
� could be saved.
POLICY:
� The City of Saint Paul supports amending the current Iaw to remove
the mandatory requirement for audits by the State Auditor for
cities of the first class� oz mandate that the state pay fpr
� the costs of the audit.
�
�
�
Page 14
�
2 2. MULTI-STATE T�;X CONL*ST SS TON: �
BACKGFOUND: �
The Mu1ti-State Tax Commission is a joint agency of 19 states
formed to help the states work together to improve their
administration of tax laws. The Commission also operates a �
small joint auditing program allowing states to audit corporate
tax and sales tax returns.
Minnesota currently is an associate member of the MTC. P.ssociate �
members cannot, however, participate in joint audits. For the
period 1973r1977, Regular Member States collected an additional
$16,813,639 in taxes owed by audited corporations for $1,385,450 �
in costs. P.eturn to cost ratio is 12 to 1.
By encouraging uniformity among state corporate tax policies and' �
effective auditing of multi-state taxpayers, the N:TC promotes
stable tax climates needed for business investment.
POLICY: �
The City of Saint Paul encourages the Legislature to become Regular
Members of the Multi-State Tax Commission. �
23. TNVESTMENT IN CONtMERCIAL PAPER: �
Bl•sCKGROUND: �
With the significant volume of funds available for investment by
the Port P_uthority and the need to invest funds for short periods �
of time from construction accounts, it would be advantageous if
the Port Authority were able to invest in Commercial Paper. The
Port Authority now is limited to investment in government
securities or Certificates of Deposit when collateralized with �
government securities. Commercial Paper and Certificates of
Deposit for short-term investments provide significantly higher
interest rates than the normal federal securities in periods of �
stable interest rates. For the Port P,uthority' s long-term
investment program and need to invest in short term, it would
be a significant advantage to have the statutory changes made
to permit investment in Commercial Paper, both finance or �
industrial primes, limiting it to Ratings A-1 and P-1, and
A-2 and P-2.
�
�
�
�
Page 15
,
� Certain public agencies have been granted this statutory
authority by the Legislature, i.e. , City of St. Cloud, University
of Minnesota, State of riinnesota Investment Board, Minnesota
� Higher Education Coordinating Council, and the Metropolitan
Airports Commission.
� POLICY:
The City of Saint Paul supports an amendment_to M.S. 1978,
Chapter 458, in order to allow the Port Authority to invest its
� funds in Commercial Paper.
�
24. ASSESSMETIT FOR OPERATING COSTS OF PUBLIC FACILITIES:
� BACKGP.OTJ:�TD:
The existing statutes governing the City's ability to assess
� property owners prevents the City from being able to assess for
the operating costs of projects such as the proposed Seventh
Place Building. The ability to assess private property owners
� is essential if the City is to fulfill the adopted financial plan
for the Seventh Place Project.
� POLICY:
The City of Saint Paul supports passage of legislation which _
will enable the City to assess private property owners for the
� annual operating costs for the Seventh Place Building and any
other pZazas, malls, and public facilities not specified in
existing law.
�
�
�
�
� 1/18/79
�
�
�
�
FISCAL NOTES ON SAINT PAUL
�
SAINT PAUL'S TAX BASE
� Saint Paul's most pres5ing fiscal problem is the increasing gap
between property tax revenues and the cost of providing public
� services. Property values and additions to the tax base have
not kept pace with inflationary pressures on the cost of public
services. From January 1974 to January 1979, the consumer price
index increased 46.9$. During the same time period, the City's
, budget increased at less than the rate of inflation, 45.3�. The
City's tax base, however, increased only 22.5$ during this same
period, averaging an annual rate of increase of approximately 4�.
� This rate of increase includes the assistance provided by the
Metropolitan Tax Base Sharing Program (Fiscal Disparities) .
With an annual rate of inflation of 6-8$ or higher, and with tax
� base growth limited to 3-4$ annually, property tax revenues are an
inadequate source of revenue to support the increase in costs to
maintain existing City services.
� The following table details assessed valuation of property in
Saint Paul from 1950-1979 and illustrates limited tax base growth.
� Table A. ASSESSED VALUATION OF PROPERTY,
SAI PAUL, -
,• Budget Assessed Taxable .
Year Valuation Valuation (1)
� 1950 $ 170,661,227
1960 236,013,089
1965 246,381,845
� 1970 227,580,496
1971 260,972,668
1g72 267,413,668
1973 752,167,028 (2)
� lg�g 752,470,646 {2)
1975 759,501,963 S 775,112,150
1976 811,408 ,529 831,737,200
� 1977 850, 353,492 871 ,947 ,977
lg�g 855,090 ,631 884, 794 ,307
1979 891,806,053 921,870 ,867
� (1) Includes sharing under Fiscal Disparities Act.
(2) Minnesota Statutes, 273 .11, as amended by Chapter 831,
Laws of 1971.
, Source: City of Saint Paul
�
�
, Page-2-
,
�
�PROPERTY TAX RATES
, The 1979 city tax rate is 36 .24 per $1,000 of assessed valuation
(36.24 mills) . This is significantly higher than that for all
other municipalities in the region except Minneapolis. When
� the tax rates of Independent School District No. 625, Ramsey
County, and special districts are included, the total tax rate
for Saint Paul property owners for 1979 is 5129.78 per 51,000.
� The high city tax rates impose burdens on low-income residents
and small businesses and encourage some firms to move to lower
tax locations. The breakdown of Saint Paul's propertg tax rate
� is shown for each year between 1974 and 1979 in the following
table:
� Table B. PROPERTY TAX RATES, SAINT PAUL, 1974-1979 (1)
Budget Year
19 1 75 1 7 1 77 1 7 . 1979
� 4 45.22 $34.68 $35.53 $34 .86 $36 .24
City of St. Paul $38. 3 $
Independent School
� District #625 55.97 60.41 55 .93 60 .05 57.88 55.05
County of Ramsey 28.05 34 .16 31.00 33 .32 33.49 33 .20
Special Districts 4 .87 6.75 5.11 5.02 4 .86 5.29
� Total Tax Rate (2) $127.33 $146.54 $126 .72 $133.92 $1�31.02 5129 .78
, (1) Per $1,000 assessed valuation.
(2) Errors in totals due to rounding.
, Source: City of Saint Paul
�
TAXABLE VALUATION AND FISCAL DISPARITIES
� Partly because of Saint Paul's tax situation, the Minnesota
Legislature passed a law in 1971 instituting metropolitan tax base
� sharing to reduce fiscal disparities among communities in the
metropolitan area. This legislation distributes 40$ of the growth
in commercial industrial valuation that has occurred since 1971.
�
�
�
� Pa e-3-
g
�
�
, Table C. ,Taxable Valuation and
� Fiscal Disparities
� . Net
Assessed Taxable Fiscal Disparities
Valuation Valuation Distribution
� 1974 $ 752,470,646 $ 752,47Q,646 -0-
� 1975 759,501,963 775,I12,150 $ 15,610 ,187
1976 81I,408,529 83I,737,200 20,328,671
� 1977 850,353,492 871,947,977 21,594,485
1978 855,090,631 884 , 794,307 29 ,7Q3,676
� 1979 891,806,053 921,870, 867 30,064,814
Percent increase 18.5$ 22.5�
, 1974-79 Source: � City of Saint Paul
� �
�
�
� The above table demonstrates that the enactment of the fiscal
disparities leqislation has helped to increase Saint Paul's
taxable valuation. Wi�thout fiscal disparities , Saint Paul' s
� tax base would have increased 18.5� and with fiscal disparities .
it increased 22.5$, which is a net gain over a six-year period
of 3�. Thus, while fiscal disparities does help to strengthen
� Saint Paul's tax base, the assistance provided through tax base
sharing is not sufficient to make up the difference between the
City' s lagging tax base and the rate of inflation.
�
,
�
� •
� Page-4-
�
�
STATE AID
! Primarily because of the property tax situation, Saint Paul has
become increasingly reliant upon revenues from other jurisdictions,
particularly state aid. Property tax revenues now provide 38 .2� of
� general fund City revenues as compared to 47.5$ in the 1974 budget.
Since 1974, state aid to Saint Paul has increased from 21.9� of
total revenues to 26.3$. The following Table represents the trends
� in municipal revenues between the years 1974 and 1979 .
Table D. MUNICIPAL FINANCING SOURCES,
� SA PAUL, 4-1 7
� 1974 1979 Bud et
Do ar Percent Do ar Percent
Revenues Distribution Revenues Distribution
� Property Tax Levy $28,277,200 47.5$ $32,982,482 38 .2�
State Aid to Local
� Governr.ients 13,018,600 21.9 22,738,901 26.3
City Collected
Special Tax 6,286,000 10.6 11,291,800 13.1
Federal Revenue
� Sharing 5,477,000 9.2 5,172,787 6 .0
Fund Balances 1,013,500 1.7 5,225,936 6 .0
Misc. Sources 5,445,000 9 .1 9,006 ,744 10 .4
, Total $59,517,300 100.0� $86,418,650 100.0�
Source: City of Saint Paul General Revenue Fund Budgets
�
�
� The above table demonstrates that state aid to local goaernment
has been the most important source of increased revenue during
this time period. Saint Paul has received an increase of nearly
� $9.7 million over this five-year period.
,
�
�
, Page-S-
�
, The following table, however, makes clear that the increased
assistance provided to Saint Paul has been less than the in-
crease provided to either Minneapolis or to suburban areas.
� Saint Paul ' s state aid has increased more than 100� since 1973 ,
while allocations to all other metropolitan suburban communities
have increased 153 .8� and Minneapolis' state aid has increased
� 160.3� .
,
�
Table E. Growth in State Aid
� 1973-1979
Year Minneapolis Saint Paul Other Metro Total
� 1973 17,208,257 11,329 ,567 16,134,587 44 ,672,41I
. ( .3852) ( .2536) ( .3612)
� 1974 19,412,887 ' .13,018,567 22,723,969 55,155,423
( .3520) ( .2360) ( .4120)
� 1975 20,483,050 13,018 ,567 23,492,087 56,993,704
( .3594) ( .2284} ( .4122)
� 1976 30,505,572 17,763,757 27,973 ,309 76,242,638
( .4001) ( .2330) ( . 3669)
1977 33,1.84,632 18,596 ,657 30,053,346 81,834 ,635
, ( .4055) ( .2272) ( . 3672)
1978 39,722,509 2i,085 ,631 34 ,066 ,241 94,875 ,381
� ( .4187) ( .2223) ( . 3591) .
1979 44,797,174 22,738,9QI 40,955,271 108,491 ,346
( .4529) ( .2096) ( . 3775)
� Percent 160. 3� 100. 7$ 153 . 8� 142.9$
Increase
, 1973-79
Source: Minnesota Department of Revenue
�
�
�
ePage-6-
�
, 'BUDGET CONTROL
, Reducing the level of City expenditures has been a priority for
the City for several years. During the past two years, the City
has reduced City employment by more than 200 positions. Between
� 1974 and 1979 , the City' s general fund budget increased from
$59 .5 million to $86.4 million, a 45. 2� increase which is less
than the rate of inflation for that period of 47 .3$.
, The State Planning Agency recently completed a comprehensive
analysis of the City' s spending.* When compared to other cities
of Saint Paul' s population size, the report concluded that
� "municipal expenditures per capita . . . . •in Saint Paul are below
average for U.S. cities of its size . "
The report also documents that the number of municipal employees
� per capita in Saint Paul is well below the national average.
Seventy-five percent (75�) of the cities included in the sample
have more employees per capita than Saint Paul.
, This same Planning Agency study also gave the City high marks for
consistently passing through increases in state and federal aid
to provide property tax relief. The only area where Saint Paul' s
� costs appear high compared to other cities across the country is
in the area of wages, where the City' s salaries for non-profe$sional
and uniformed employees are above the national average. During
' the past two years, however, the City has addressed this issue
through the collective bargaining process. All settlements
averaged 5.13� in 1977, while the cost of living increased 8. 3�.
, All wage settlements for 1978 have been 6 . 2� or less, again well
below inflationary increases.
FIXED COSTS
, A substantial portion of the City budget is dedicated either to
fixed costs or to fire and police services. $32.3 million was
� required for debt service and employee fringe benefits out of an
$86. 4 million 1979 budget. This represents 37 .3� of total City
expenditures. Another $24.9 million is required to support the
� police and fire departments. Combining these costs represents
two-thirds of the City' s general fund budget.
� * Minneapolis-St. Paul Study, Office of Local
and Urban Affairs, Minnesota State Planning
� Agency 1978
�
�
� Page-7-
,
� The City is committed to reducing the burden which fixed costs
place on the city taxpayer. The Mayor' s debt reduction program
, which was adopted by the City Council in January 1978 places a
limit of $10,500,000 on the amount of general obligation debt
which the City can issue in any one year. This program will
� reduce the level of outstanding local general obligation bonded
debt from its 1977 level of 8.5� of market value to less than
6� by 1985. It will also reduce the current level of $1,039 per
capita of outstanding debt to less than $900 during the same time
� period. This program will reduce debt service expenditure levels
over the long run. But it cannot substantially affect the amount
of funds required for the 1979 or 1980 �udgets.
� The Mayor and City Council are also committed to reducing the
costs taxpayers must pay for employee pensions. The level of
funding for the City' s pension programs is controlled by state
� legislation. The City administration is working with employee
groups and state legislators to secure passage of a revised
funding program which would provide property tax relief.
� FACTORS CONTRIBUTING TO
SAINT PAUL'S FISCAL SITUATION
� Saint Paul has many assets, including strong neighborhoods, an
aggressive down�own development program, and a commitment to
sound financial management. When compared to most other older
, northern cities, Saint Paul is a healthy city with a strong
economic base.
, As with any older city, however, Saint Paul must continually cope
with a variety of factors which contribute to the City's fiscal
condition.
� The concentraion of lower income households and non-taxable
property in Saint Paul creates a demand for municipal services
disproportionate to City resources. Twenty-nine point three
� per cent (29.3�) of the city's real estate is non-taxable (1977
figure) . Median family income is $18,400 (1978 estimate) ,
86$ of the regional median.
� Contrasting with this local resources picture is the picture of
local needs. Much of the city' s housing is in need of repair
and rehabilitation. Sixty-two per cent (62�) of the city' s
, housing stock was built prior to 1939 . It is estimated that
as much as 30$ of the city' s total housing is in need of
rehabilitation.
�
�
,
, Page-8-
,
� More difficult to address are the maintenance and rehabilitation
requirements of aging public facilities , such as streets, sewers,
, and public buildings, which need greater attention than the
new roads and structures of developinq areas.
, Also, public safety requirements are greater in Saint Paul than
in newer jurisdictions, reflecting higher central city crime
rates and the large number of older buildings more subject to
fire damage.
� In addition, the Dutch Elm Disease program has required $20.0 million
through 1978 for tree removal and replanting. By the end of 1978 ,
, the City will have removed more than 100 ,000 diseased trees from
public and private property and will have replanted nearly
44 ,000 new trees on public property.
� FUTURE DIRECTIONS
A cooperative effort will continue to be necessary to deal with
, Saint Paul' s fiscal situation. The City will need to remain
committed to expenditure control and careful debt management.
An aggressive local economic development and neighborhood
� revitalization program will continue to be essential in order to
strengthen the economy and build the tax base.
Other elements are beyond the direct control of the City.
, Saint Paul can levy no other local tax besides the property tax.
Continued assistance through the state aid program will be
necessary to keep real estate taxes from increasing. New
, legislation is needed in the pension area in order to reduce th�
burden on the property tax. The state will also need to continue
its assistance in the housing and redevelopment areas so that
the City' s local development programs can be strengthened and
� maintained.
�
,
t-4-79
,
,
,
�
' ,
,
� , S 1
� lst �. 2nd I 1 / .2 �
3rd ��I 3 0 Adop ted���
Yeas Nays
BUTLER
HtJNT r� �
� r���� � .
LEVINE
�
. �
MADDOX �
SHOWALTER �
TEDESCO �
� •
PRESIDENT (HOZZA) �
i
t