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-- .-- JAN 16 '98 05:11PM LERGUE OF MN CITIES ---- --. ~.'t\-~~ LMC \ I:;;LD \'11.i LD<7i'~"" . FRIDAvFAX Li.:zgllfl o/Mi~ Ot;.. Vol. 3, No.1 Cn.. ~"g.....,""'- A weekly legislative update from the League of Minnesota Cities January 16. 1998 Cambridge: Round Two First. we had a state auditor's re- not covered by the limit. According Cities also should consider the im- port issued in October, nearly a to Dutcher, in 1995 the city issued plications on their net debt limit if year after the city of Cambridge bonds for a total of $995,000 in im- portions of non-special-assessment identified its financial problems and provements, of which only bonds are included under the net implemented a recovery plan. Now, $241,000 was to be spent on im- debt limit. Although all cities may we have a flurry of legislative activ- provements. To further complicate be affected, cities that are most at ity to correct a complicated prob- matters, only $20,000 of the Im- risk may be those that are fully de- lem. after the fact, and address a provements were assessed. She veloped and are unable to fully as- local situation with statewide legis- essentially contends that cities can sess for improvements, lation, avoid th e net de bt limit law by issu- Unfortunately, Dutcher'S initia- In the wake of the petition audit ing debt in the guise of improve- tives may be just the tip of the ice- on Cambridge, State Auditor Judy ments. berg. We have heard rumors that Dutcher has raised questions about To remedy the situation, other legislators may be conSidering how the city could issue more than Dutcher askS the House and Sen- similar "reforms" being touted as $33 million in debt when the net ate leadership to consider clarifying "ways 10 avoid another Cambridge- debt limit would apparently allow the net debt Ii mil law by only allow- like financial disaster." Other initia- only $3 million in obligations. i ng the portion of a bond issue sup- tives may be procedural in nature, . In a letter sent to House and ported by special assessments to such as requiring that financial ra- Senate leadership, Dutcher outlined be exempted from the net debt ports be shared with the city council the Cambridge problem and how limit. at a publiC hearing. the city apparently disregarded leg- Cities should be prepared for League staff will be watching islative intent by using special as- calls from local newspapen> or leg- where this latest and other possible sessment-supported bonds that are islaton> if this proposal goes further, proposalS may lead during the com- ing session, and how they affect cit- _0 -' ies and city management. .. Governor proposes further class rate reductions [ Start of the ~ession means As part of the Governor's supplemental budget, the Governor is proposing weekly LMC FridayFax reductions in the rates of all major classes of property except the first tier of homesteads (value less than $75,000). These proposed reductions would in Every city in Minnesota knows some cases exceed the target elass rates established in the 1997 tax bill. I what is just around the corner-the The greatest reductions would be for commercial, industrial, and utility 1998 legislative session. The slart classes, wIlich would see the rate go from the current 4,0 percent of market of session also means a Friday- value to 3.65 percent for taxes payable in 1999, 3.5 percent for taxes pay- Fax sent weekly from the League able in 2000. and would establish a new target rate for the class of 3.0 per- to your city hall. The Fri!iayFax in- cent. eludes late-breaking newS from The Governor's proposal has great implications for the long term shift- the capitol, a preview of the com- ing of tax burden from business to residential property. The proposed class iog week'S issues, and important rates also have implications for the viability of both current and future lax in- action alerts needing your atten- crement financing districts. tion, For a more in-depth discus- Will these reductions become law? Some DFL legislators have ex- sion of legislative issues impact- pressed support for continued class rate reductions, while many Republican ing local government, members . legiSlators have shown a preference for focusing on income tax reductions should refer to the Cities Bulletin- instead. The proposal will certainly be a major topic of debate in the House also published weekly during the I and Senate tax committees. .. sesSIon. I" I . - . .. . __ _~__~_ _.... __M". 1l(11t~ 1.~8W1e of Mill"notlJ Cities l"rngqwm",elltaJ Rel4Iioll' tam.