Tuesday, December 20, 2011

Legislators take note: State’s failure to honor its obligation prompted League support for MVHC elimination
By Jim Miller, Executive Director, League of Minnesota Cities

When State Representative Steve Drazkowski recently offered his perspective on cities’ responses to the Legislature’s action eliminating the market value homestead credit (MVHC) program in favor of the market value homestead exclusion system (Winona Daily News, December 8th) he conveniently glossed over the fiscal impact this change—approved by the Legislature, not city officials—had on local government budgets. He did further injustice to local officials by saying it’s “cowardly” for local officials to blame the state for property tax increases resulting from this change. Telling the truth is different than casting blame.

Under the MVHC program, many homeowners received a credit on their property taxes, ostensibly paid on your behalf by the State. If, for example, you were eligible for the credit and your total tax bill was $1,500, you might only have to pay $1,300 to your city, county and school district. In theory, the State then paid the $200 difference to those local governments; you received a credit thereby reducing what you paid, and the local governments collected every dollar they levied, most from you and some from the State.

Unfortunately, the program functioned that way only twice in its 10-year history. The State consistently failed in its commitment to reimburse local governments. While taxpayers continued to receive a reduction in their tax bills, local governments received only part—or in some cases, none—of the amount equal to the credit. In 2011, for example, out of every $1 of credit against the city portion of their tax bills that homeowners received, cities only received 14 cents from the state. The other 86 cents had to be absorbed by all city property tax payers—residents and business owners alike.

Had the Legislature honored its obligation by funding, dollar for dollar, the amount of the credit it gave homeowners, the League of Minnesota Cities would have supported keeping the old system. To their credit, legislators realized the program was broken and abolished it in favor of the new market value homestead exclusion program. Indeed, the League supported this change only as a way to ensure more certainty in the city budgeting process.

The conversion to a market value homestead exclusion system is more than merely a semantic change; it has significant, but not unpredicted, consequences for both taxpayers and local governments. In effect, while most homeowners who previously qualified for the credit will see a reduction in the taxable value of their homes to generally offset the loss of the credit, the state will no longer pay a portion of homeowner taxes. Beginning in 2012, the city’s entire levy now will be paid by all of its taxpayers.

Representative Drazkowski would have you believe resulting property tax increases in 2012 are caused solely by local officials. But, it is disingenuous, if not misleading, to assert the state’s action to take $261 million in property tax relief out of the system was not a major factor in property taxes increases for the coming year. City officials are not blaming the state and they certainly are not acting in a cowardly manner. They are simply recognizing the reality this change has had on their budgets, and they are now trying to educate their constituents on how these changes affect local taxes. Representative Drazkowski and other legislators should do likewise.

Thursday, September 22, 2011

Analysis: MVHC elimination supported by League of Minnesota Cities marks the end of a recurring shell game

Over the past few weeks, there has been extensive media coverage concerning the State Legislature’s discontinuation of the market value homestead credit (MVHC) program in favor of the new homestead market value exclusion. Moreover, reports about partisan arguments at the state level over who is responsible for the change have tended to overshadow the more important news about why the program was discontinued, and what this change will really mean for cities and for local property taxpayers.

When MVHC was created by the Legislature, the program seemed to provide a win-win situation for both local property taxpayers and for city governments. While property taxpayers did indeed receive a credit, the state consistently failed to make good on its promise to reimburse cities. Some cities have not received any reimbursement for the past several years; others have only received a portion of the amount needed to make them whole. This year, only about 15 percent of the reimbursement scheduled to be paid by the state to cities will actually be paid, meaning that cities are left with a significant budget shortfall if they budgeted to receive their entire reimbursement.

Given this history of unreliability, the League and other local government groups decided enough was enough. In order to stop the recurring shell game, the League took a position to support elimination of the MVHC program. This position was driven by a desire for more transparency and fiscal certainty. Had the state consistently honored its obligation to reimburse local governments dollar for dollar for the credit it gave to homeowners on property bills, this change may not have been necessary.

Under the new homestead market value exclusion law, these local governments will no longer be dependent on the state paying (or, more accurately, not paying) for part of its levy each year. Now local officials will be assured of receiving the amount they levy, and many homeowners will see part of the market value of their home excluded from taxation. The downside for city residents, of course, is that many of them will see increases in their next property tax bill.

While conversion to the new system may cause temporary confusion and shift the property tax burden to some extent, local governments will be better able to make budget and property tax decisions going forward and will be clearly accountable to their taxpayers for those decisions. Ultimately, that’s better for our cities and for local property taxpayers.

Thursday, September 8, 2011

Through comments and bean counting, fairgoers weigh-in on city services and funding

Over the 12 days of the Minnesota State Fair approximately 10,000 fairgoers visited the Cities Matter exhibit booth, sponsored by the League of Minnesota Cities. The Cities Matter booth offered interactive activities to help fairgoers understand more about city services, as well as to provide them with an opportunity to voice their thoughts about how best to provide those services.

As part of the “Idea Avenue” activity, fairgoers were asked for their thoughts about what city leaders should focus on when making decisions about city services and funding. Those with ideas had an opportunity to write them down on note cards and place them on the Idea Board display. The League will combine those ideas and comments with others collected during a series of Community Conversations held in 12 cities over the past summer.

A second activity provided booth visitors an opportunity to be a “city bean counter.” Each person was given a six-bean budget with a goal of deciding how to “spend” their beans among eight different city services. They were permitted to allocate all of their beans to a single service, or to divide them any way they wished. Through playing the game, visitors quickly got a better understanding of the tough budgeting decisions that city officials are required to make. More than 7,000 people participated in the city bean counter activity, and this is how they spent their beans:

Police: 7,243
Clean Water: 6,872
Fire: 5,608
Libraries: 5,316
Parks & Recreation: 4,969
Senior Services: 4,306
Streets & Sidewalks: 4,213
Sewers & Garbage: 4,004

Visit the League of Minnesota Cities Facebook page to see images from the Cities Matter booth at the State Fair.

Wednesday, June 29, 2011

Court sides with League of Minnesota Cities on payment of local government aid and other appropriations

Earlier today, Chief Ramsey County District Court Judge Kathleen Gearin issued an order directing the State’s Commissioner of Management and Budget to “make payments such as LGA [local government aid] payments that have already been lawfully appropriated” in the event of a state government shutdown. The ruling--as it stands--ensures that cities should receive LGA appropriations on July 20, as scheduled.

Judge Gearin’s ruling is consistent with arguments the League presented in a response to the State Attorney General’s petition on funding of core functions of government. That response was co-signed by the Coalition of Greater Minnesota Cities and the City of St. Paul. In the response and in verbal testimony at a subsequent hearing, the League maintained that standing appropriations, including LGA, market value homestead credit (MVHC) reimbursement, police and fire pension aids, and utility value replacement aid for cities should not be withheld or delayed if a shutdown occurs.

Monday, June 27, 2011

The impending state government shutdown -- thought for the day

In Minnesota 854 cities, 87 counties, 1,786 townships, 519 school districts – all with elected officials who don’t always see eye-to-eye – manage every year to agree to a budget, on time.

Monday, June 13, 2011

Community Conversations continue in Moorhead and Bemidji
The cities of Moorhead and Bemidji recently became the fifth and sixth communities to complete a series of Cities, Services, and Funding Community Conversations sponsored by the League of Minnesota Cities. Each city hosted four conversations designed to learn resident preferences for tough budgeting choices that cities will need to make in the near future, and how those choices will affect service delivery.

On Saturday, the Bemidji Pioneer reported that:
In the final meeting, open to the public, the group focused on the question: What are the most important considerations to keep in mind in making these tough choices? All suggestions and ideas were accepted and then each person voted for his or her top three answers.

In no particular order, some of the most-liked answers were: health, safety and well-being of area residents; using science, i.e. water quality, to ensure health and safety; quality of life and livability; combined services, such as a joint powers system; fair tax or a sales/consumption tax; having a vision or intelligent plan in city design; consolidation and sharing of services (such as between cities or a city-county partnership, for example); and consideration of vulnerable populations through an advocate, to hear them and listen to their needs.


Next up: the City of Eveleth

Wednesday, May 11, 2011

City residents share ideas, concerns in series of community conversations

The community conversations component of the Cities, Services and Funding project--sponsored by the League of Minnesota Cities with funding from the Bush Foundation--is now well underway. Initial meetings were held last week and this week in the cities of Northfield, St. James and St. Paul, and more than 120 residents have participated, to date.

When League staff travelled to the City of St. James last week, they were accompanied at all four community conversations held there by Minnesota Public Radio (MPR) reporter Dave Peters. Dave is the author of MPR’s “Ground Level” blog, and he writes frequently about issues facing Minnesota cities. The subsequent story filed by Dave provides an excellent overview of the project, to date.

Twin Cities Public Television (TPT), in partnership with the League, has begun airing the first in a series of “interstitials” promoting the statewide Community Conversations. Each of the interstitials is about 90 seconds in length, and will be shown on TPT’s “Minnesota Channel” during breaks between shows. If you are a regular viewer of Almanac, you may recognize the work of cartoonist David Gillette in each interstitial. There will be a new interstitial running each month from May through August – Interstitial #1 is an overview of the Community Conversations on Cities, Services & Funding. The next three will parallel the topics of the Community Conversations discussions: what services cities should provide, how city services should be delivered, and how they should be paid for.

Friday, April 29, 2011

League of Minnesota Cities Insurance Trust names Boe as coordinator of a new loss control program

The League of Minnesota Cities Insurance Trust (LMCIT) has hired former police officer and county deputy Robert Boe as its public safety project coordinator. Previously Boe has been employed as a peace officer with both the Prior Lake Police department and with the Scott County Sheriff’s office, where he served as Chief Deputy. He has also served as a firefighter with the Burnsville Department of Public Safety, and the Bloomington rescue squad.

Boe’s hiring as public safety coordinator marks the launch of a new LMCIT loss control program designed to focus on researching and understanding the causes of public safety losses, developing new programs to reduce losses, and launching new efforts to keep public safety workers safe on the job.

Including his work in law enforcement and firefighting, Boe brings to LMCIT a total of 39 years of experience in public safety. Most recently, he was contracted as a consultant for Scott County to work on the new 911 dispatch center, Scale Regional Public Safety Training Center, and related projects. Additionally, in 2008, Boe contracted with the City of St. Paul to assist city Emergency Management with planning and training for the 2008 Republican National Convention.

Friday, March 25, 2011

Public safety bills raid Fire Safety Account and statewide radio fund
by Anne Finn, League of Minnesota Cities

Minnesota House and Senate Public Safety Committees have both recommended provisions that would transfer funds from the Fire Safety Account and the Allied Radio Matrix for Emergency Response (ARMER) to the state’s general fund.

The Fire Safety Account is a dedicated account derived from a surcharge on homeowners insurance premiums for the purpose of funding the State Fire Marshal’s Office, firefighter training and regional fire service initiatives. The fund was raided by the legislature and governor in 2010, when $15 million was diverted to the state’s general fund. The House omnibus public safety bill, HF 853 (Rep. Tony Cornish, R-Good Thunder), would transfer $8.5 million from the Fire Safety Account to the general fund for the next biennium. The Senate’s bill, SF 958 (Sen. Warren Limmer, R-Maple Grove), would make a similar transfer of $6.5 million.

ARMER is the radio system used primarily by emergency responders to communicate during emergencies like natural disasters. The build-out of the system is being funded in part by a dedicated surcharge on telephone bills. The House omnibus public safety bill takes $5.2 million from ARMER for the biennium and transfers it to the state’s general fund. The Senate omnibus bill in its current form funds ARMER at $6.8 million for the biennium, the level recommended by Governor Mark Dayton.

The Fire Safety Account and the ARMER system are critical statewide programs. Further, using funds that are collected for a specific purpose to balance the state’s general fund violates the public’s trust. Both the House and Senate omnibus public safety budget bills will have floor debates next week.

Wednesday, March 23, 2011

2010 Census: City population counts now available
The U.S. Census Bureau released redistricting data for Minnesota in mid-March. This data provides the first look at local 2010 Census results and includes population counts as well as some data on race, ethnicity, and housing units. Additional data is scheduled to be released throughout the spring and summer. The League of Minnesota Cities has compiled, in a single document, populations figures for all cities in the state based on census data.

Tuesday, February 15, 2011

League of Minnesota Cities statement regarding Governor Dayton's expected budget announcement

From Jim Miller, Executive Director

Governor Dayton’s past role as state auditor, where he was charged with financial oversight of local units of government, appears to have influenced his budget recommendations. He recognizes the challenges cities face due to the fact that local budgets for 2011 were just finalized in December, leaving cities with few immediate options—other than cuts in city services such as libraries, community centers, police and fire services, streets, bridges, and others-- in the event of another round of state reductions.

He also acknowledges the longer-term pressure on the property tax that would occur under another round of state budget cuts. Given the fact that cities have been struck by repeated cuts to state aids and credit reimbursements totaling more than $300 million over the last three years, the League welcomes the Governor’s decision to protect the quality of life in our communities by sparing state aids and credits from further cuts.

Monday, February 14, 2011

No more raids: Rep. Smith introduces bill to protect Fire Safety Account
by Anne Finn, League of Minnesota Cities

Rep. Steve Smith (R-Mound) last week introduced a bill that would prohibit future raids of the Fire Safety Account, a dedicated fund that provides resources for firefighter training and regional efforts. Last year, against the objections of the League of Minnesota Cities and fire service organizations, over $15 million from the account was diverted for fiscal years 2010 and 2011 to the general fund to aid the state’s ailing budget. HF 474 does not restore the funds that were taken from the account, but it protects the account from future transfers by adding a provision stipulating that funds in the account must be appropriated to the commissioner of public safety for the purposes identified in Minn. Stat. § 299F.012.

The Fire Safety Account was created in 2007, under a statute signed into law by Governor Tim Pawlenty. Homeowners and commercial property owners pay a “fire safety surcharge” of 0.65 percent on insurance premiums. The surcharge, which is listed as a line-item on policyholders’ statements, is deposited into the Fire Safety Account. The account is used for firefighter training, state chemical and decontamination response teams, as well as the State Fire Marshall's office. The average homeowner pays $5.20 into the fund annually.

Tuesday, January 18, 2011

Budget-balancing bill would make city cuts permanent
The League of Minnesota Cities has now posted a full analysis of the potential impact of SF 60 on state aid to cities. The article includes a link to a spreadsheet with city-by-city estimates of reductions.
Statement by League of Minnesota Cities Executive Director Jim Miller re: introduction of legislation affecting state aids

State lawmakers are proposing legislation that, once again, would unduly shift the burden of solving the latest state budget crisis to local property tax payers in Minnesota. If enacted as stands, Senate File 60 would cut local government aid and market value homestead credit reimbursements to cities by $143 million for 2011. These cuts are above-and-beyond the $56.5 million in city reductions already imposed for 2011 in last year’s supplemental budget bill.

This proposal could not have come at a worse time as cities have already cut services to the bone, and many have been forced to raise property taxes, as well, in the wake of previous aid cuts over the past two years. Under the provisions of SF 60, cities will have no chance to levy back any portion of the proposed mid-year 2011 cuts since budgets and levies have already been set through December.

Today’s proposal addresses only about 17 percent of the state’s $6.2 billion deficit. While we realize that balancing the state budget requires tough choices, we hope that legislators will consider solutions that don’t force local property tax increases or threaten basic services that contribute to quality of life in our Minnesota communities.

Tuesday, January 4, 2011

Must-follows for updates about Minnesota cities

The League of Minnesota Cities has several staff members—legislative, legal, and public affairs experts-- who regularly post to Twitter during the State Legislative session. Follow them for the latest news and policy issues affecting Minnesota cities.

League of Minnesota Cities Twitter page;
Cities Matter Twitter page;
Gary Carlson—League lobbyist and intergovernmental relations director;
Anne Finn—League lobbyist and assistant IGR director;
Jennifer O’Rourke—League lobbyist;
Alexis Stangl—League research attorney;
Rachel Carlson—Loss control manager for League’s Insurance trust;
Mary-Margaret Zindren—League Communications and Strategic Initiatives Director;
Stephanie Weiss—League public relations consulting manager;
Don Reeder—League public affairs manager