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3 1 I I forms of local government aid (LGA), levied and collected from specific local city and the payments revolve homestead and agricultural credit aid property owners to repay the bonds. back into the fund to be reused on (HACA), and various grants; fees for A general obligation pledge can be put another project. services such as building permits or on a revenue bond to reassure investors Learning more about municipal finance liquor licenses; interest income on that their funds will be repaid with a reserves; and sales of water, sewer, tax levy if the anticipated revenues fall In your particular city,there are a a electric or refuse services. The process short. This will often lower the interest number of additional resources avail- of preparing the annual budget helps rate on a revenue bond. able to help you interpret the language of municipal finance. First and fore- allocate scarce resources. A budget can also serve as a management control tool Economic development finance most,your city clerk, administrator, or for monitoring success in following the There is a special sub-dialect of finance manager or your city's finance officer city's annual financial plan. language called economic development are willing to review the specifics of i For most cities, budgeting begins in finance. Key concepts here are tax your city's finances and budget. They the late spring or early summer. Cities increment financing, tax abatement, understand your city's unique circum- receive notification in August of state and revolving loan funds. stances best and will have the most dollars to be received for the next year. detailed knowledge of your city's By Sept. 15, each city must decide on financial vocabulary. a preliminary property tax levy for the "KnownIn addition, the League of Minne- following year and certify that amount sota Cities publishes the Handbook far to the county's financial officer. Once hearings,these meetings allowMinnesota Cities, which simplifies the 3 this preliminary levy is set, it can be language of state law on a number of reduced but not increased, except in to highlight the priorities ' plans issues, including finance. This docu- some very specialized cases. ment may already be available at your Late in the fall, each city must hold setforward by budget.They als' City Hall, from your public library, or - -- a public hearing to present the proposed by contacting the League. Minnesota property tax levy and budget for the allow citizens to become ' ' Cities magazine and the Cities Bulletin following year to the general public. newsletter are also good LMC sources Known as the "Truth in Taxation" " ' ' ' '' ' of information about the interesting x hearings, these meetings allow city staff language of municipal finance. to highlight the priorities and plans set ion property, 'the services The bottom line is that better forward by the budget.They also allow understanding of the terms and basic 1' citizens to become informed about the that willbe provided by ' operations of municipal finance helps impact of City Council decisions on decision-makers make better decisions. their property taxes and the services Learning the basic concepts of munici- In tax increment financing, a new al finance is within our reach. B that will be provided by those taxes. g p y y Following this hearing, the City construction or renovation can produce combining these basic finance language Council adopts the final property tax higher property taxes from a property. skills with interpreter services from ; levy and the budget for the upcoming The additional tax generated by the your local city staff,you can be year. investment,which creates a higher conversational in this language with -- property value,is called the tax incre- positive results for your city. r Issuing bonds for city projects ment. Tax increment can only be used Understanding when, how, and why a for very specific economic develop- city issues bonds is important. In order ment projects and under specific ' to do large projects,bonds are often circumstances. While its use continues I sold to get the cash for a project up to be restricted by legislation, tax 1' front while paying for it in installments, increment is still a valuable tool in the like a mortgage. Unlike a mortgage, economic development toolbox. the city pledges either its taxing Tax abatement is a relatively new Dan Jordet is deputy city manager for the , authority (in a general obligation bond) concept in which taxes paid by a project city of Mankato, Minn., and a presenter } or the revenues from its utilities or or property can be assigned to pay costs at the LMC Newly Elected Officials other specific source (in a revenue for a specific public improvement. Conferences held each January. For more bond) to repay the loan from the bond Local revolving loan funds can be information about the Newly Elected investors. Assessment bonds are a established through acquisition of grant Officials Conference and the Leadership special kind of revenue bond issued to funds from the Department of Trade Conference for Experienced City Offiicials, do capital improvement or mainte- and Economic Development or through please contact Conferences £r Training nance projects. When a specific user private grant applications. Loans are Manager Jodie Tooley atjtooley@lmnc.org benefits from a project, assessments are made under policies developed by the or(651) 281-1251. . i f 10 MINNESOTA CITIES SEPTEMEE0. 2000 -