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City Visit and Legislative Update

City Visit and Legislative Update. Summer 2013. CGMC Represents 83 Cities Across the State. LGA/Property Taxes Economic Development Annexation and Land Use Environmental Regulation Transportation. 2012 Changes and Challenges. Election returns control of Legislature to DFL

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City Visit and Legislative Update

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  1. City Visit and Legislative Update

    Summer 2013
  2. CGMC Represents 83 Cities Across the State LGA/Property Taxes Economic Development Annexation and Land Use Environmental Regulation Transportation
  3. 2012 Changes and Challenges Election returns control of Legislature to DFL Over $600 million deficit Payback of the School Shift? Demand for property tax relief and other spending
  4. CGMC Goals Balanced state budget No gimmicks No property tax increases Reform and increase in LGA Pass CGMC economic development proposals Ensure fair share of dollars in transportation, econ. dev., and bonding
  5. LGA: Governor Committed to Reform Working Group including several CGMC mayors Governor’s budget included $80 million increase in LGA New formula – Did not adequately measure need Greater MN only receive $8 million of new $80 million
  6. LGA: Davnie Working Group CGMC and other city groups Several meetings in February and March Several different formula options explored
  7. LGA: Agreed on Formula Similar in concept to existing formula Need – Effort = LGA More Stable and Predictable than current formula Breakthrough element to enhance stability conceived by CGMC = New $ fill gap between last year’s LGA and formula determined need as appropriation allows Yearly appropriation adjustment based on inflation and pop. growth
  8. Need Factors New Formula based on an individual city tax base and formula need Need determined by the following factors:
  9. LGA Appropriation Needs Yearly Increases Inflation erodes purchasing power of LGA, forcing cities to pay for inflationary costs with property tax increases or service cuts: Increased LGA funding is needed to further reduce disparity in tax rates between cities Increased LGA funding will stabilize program by building support from suburbs
  10. LGA: Outcome New Formula $80 million increase in base LGA; now $507 million/yr. New $80m. split approx. 50/50 metro/rural No city will lose LGA in 2014 Fewer cities in total lose LGA compare to Governor’s plan or previous law No inflation adjustment
  11. $137 million $335 million
  12. LGA Proposal Impacts
  13. Other Tax Bill Outcomes More $ for PTR Program Levy Limit for 2014 only City and County exemption from local sales tax Effective January 1, 2014 2014-2015 Savings = $172 million 2016-2017 Savings = $254 million Increase in various taxes
  14. 2013 Legislative Session Outcomes – Revenue Increases, FY 2014-15* Other (about $12 million, from motor vehicle rental tax, savings from other changes) Sales Taxes (Affiliate Nexus, Electronic/Commercial Equipment Repair, other)* Estate Tax Changes Tobacco Taxes Corporate Franchise Tax Changes Income Tax Changes (including 4th tier at 9.85%) *Note: No new taxes on alcohol and no sales tax on clothing.
  15. Greater MN Economic Development Partnership (GMEDP) Established by CGMC to provide more effective voice for Greater MN economic development Membership includes: 9 Chambers of Commerce 19 EDAs MN Association of Development Organizations 6 Initiative Foundations Program managed/developed by Exec. Cmte of members
  16. Economic Development Initiatives(Greater MN Focused) Changes to Angel Investment Program Internship Tax Credit Jobs Training Tax Credit Business Expansion Program Sales Tax Exemption Jobs Credit State C/I Property Tax Exemption
  17. Economic Development: Two CGMC/GMEDP Initiatives Pass into Law Internship Tax Credit = $2 million/yr. Sales Tax Exemption for Business Expansions = $7 million/yr.
  18. Overall Economic Development Outcomes: Show Me The Money! MN Job Creation Fund = $12 million/yr. MN Investment Fund = $15 million/yr. Redevelopment Program = $6 million in 2014 (1/2 set aside for greater MN) Housing Challenge Grant = $28 million/biennium Mayo Clinic Destination Medical Center 3M in Maplewood Baxter Pharmaceuticals in Brooklyn Park
  19. Transportation Comprehensive package that included metro sales tax and gas – Not to be Final bill = “Lights on, Plus” Largely maintained current funding $300 million for “Corridors of Commerce” $37 million for SW Corridor LRT $10 million for greater MN Transit
  20. Annexation Defeated late session push from townships to weaken annexation by ordinance and change orderly annexation rules
  21. Environment Municipal Labs certification changed to make process simpler and less costly Creation of Greater MN Parks and Trails Commission to assist in planning and distribution of Legacy Money Legacy bill split parks and trails money 40% Metro, 40% DNR, 20% Greater MN
  22. Upcoming Events CGMC Summer Conference in Bemidji: July 24-26 CGMC Fall Conference in Alexandria: Nov. 13-15
  23. Conclusion: Solid Year; More Work to be Done Change from LGA defense to rebuilding program Lack of inflation adjustment means city’s will need to seek increase for 2015 2014 Session big for transportation? Need to maintain and build Greater MN economic development efforts
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