Loading...
HomeMy WebLinkAbout2000-11-16 Agenda • CITY OF ARDEN HILLS Operations & Finance Committee Meeting Revised Agenda Thursday, November 16, 2000 Arden Hills City Hall,4364 West Round Lake Road 1. Call to Order 2. Roll Call 3. Approval of minutes from the October 19, 2000 meeting. 4. Old Business: A. City HACA/LGA *Guest Speaker Gene Ranieri, Executive Director, Association of Metropolitan Municipalities (AMM) B. City Streetlights C. City Entry Signs 5. New Business • 6. Staff Update 7. Council Update 8. Other Business 9. Next Meeting Date 10. Adjournment Please contact Pam at (6510 633-5676 if you are unable to attend this meeting. I • Discussion Outline Arden Hills Finance Committee 1. Sales Tax Exemption. - LMC and AMM Policies(eliminate the tax, revenue impact, relationship to levy base) - Exemptions since 1991- specific buildings—(public owned and occupied and public leased), equipment - School exemption - LMC AMM conference call with cities of Arden Hills, Farmington,Blaine 2. Legislative Actions. - special law - general law - role of local legislators - cost of exemption to(city,taxpayer) - reaction of Department of Revenue(fiscal note,official policy) 3. Legislative Content. • - definition of facility definition of activities"improvements to existing,new construction" - time frame(retroactive,prospective) - method of exemption—reimbursement or other. 4. Legislative schedule - November—December -determine legislative content - November-December-meet with local legislators to request support - December.Approve proposal locally and request legislator to have bill drafted. (prepare background briefing paper) - December—January. With local legislators meet with tax committee leadership.Purpose is to brief the leadership, request hearing and gauge feasibility of effort's success. - January through May—contact with local legislators and committee members - January—April. Prepare brief presentation for committee. II Homestead Credit 411 - Fiscal Context(Governor's handout) State local fiscal relationship reform - Property tax reform (Governor's Big Plan,Phase III, Senate) K-12 SCHOOLS: PERFORMANCE AND ACCOUNTABILITY • The Problem: Teacher quality is one of the best indicators of student achievement, yet the current compensation system does not provide the right incentives for developing and maintaining a high quality teaching staff. With the current teacher compensation structure: • Pay schedules are tied to years of employment and the number of course credits taken ("steps and lanes"). These schedules do not reward effective teaching or differentiate among the skills and productivity of various teachers. • It's increasingly difficult to attract and retain quality teachers, particularly in some regions and subjects. Can't Get Them Can't Keep Them • lack of career paths • 20% leave the field within 4 years —many due to lack • tight labor market of time for professional growth and mentoring • lack of pay differentiation • Many leave rural districts for more money and better for individual productivity benefits elsewhere • These factors are contributing to a teacher shortage in Minnesota, especially in math, science, special education and some technical-vocational areas. The Proposal: While school districts already have the authority to change their compensation structures, change is difficult. This proposal recommends an additional $100 per pupil for districts that adopt contracts tying teacher compensation to student performance. To be eligible for this incentive • funding, locally-designed compensation contracts would have to meet the following criteria: • specific measures of student achievement • successful implementation of grad standards • established career options for teachers tied to • professional standards for effective teaching involvement in instruction or mentoring • district-wide parent involvement plans The Rationale: Research shows that: • Student success is directly related to the quality of teaching. • Support from, and interaction with, other teachers are essential for new teacher success and retention. • Teachers, and potential teaching candidates, want multiple career paths with different compensation rates. Multiple career path structures provide better incentives for professional advancement. • Performance-based rewards tied to accountability systems and student performance have been implemented in several states (Colorado, Arizona, Ohio) as a way of improving student performance. Expected, Measurable Outcomes: These measures should improve as the availability and retention of quality teachers increase: • Improved student achievement in districts with teacher compensation plans tied to performance and student achievement. • Fewer teachers leaving the field and more post-secondary students choosing to enter the teaching • profession. • Districts reporting fewer unfilled positions and fewer teachers teaching outside their area of expertise. FINANCIAL CONTEXT - STATE OF MINNESOTA For the 2002-03 biennium, state spending from all funds is projected to be $39.3 billion. • Spending from the General Fund is expected to be $26.2 billion, based on current planning estimates. (These numbers will be updated in a forecast available the end of this month.) Four programs are projected to account for 77% of General Fund spending: • $8.6 billion for K-12 Education (33%) • $4.5 billion for Health Care (17%) • $3.5 billion for Property Tax Aids and Credits (13%) • $2.8 billion for Higher Education (11%) The Governor's interest in limiting the rate of growth in state expenditures to that of inflation suggests careful planning for these spending areas that comprise more than two-thirds of the state budget. That goal cannot be attained unless it is applied to these "budget drivers" as well. In fact, three of these areas ( K-12 education, health care, and property tax aids and credits) have grown at a rate that far exceeds the rate of inflation. From the last biennium to the current biennium, all three of these areas grew by about 20% or more. From the current biennium to the next, based on current law, these areas are again projected to grow at a rate that far exceeds the expected rate of inflation with health care topping the list at a rate of growth of almost 26%. Current planning estimates indicate that covering the costs of existing programs and addressing inflationary pressures results in spending increases that exceed the rate of inflation and may leave high priority programs inadequately addressed. Examining the • effectiveness and priority of current state programs in an effort to appropriately reallocate funds from lower to higher priorities will be a critical element in the development of the budget. Clearly, taxpayers fund not only state programs, but local public expenditures as well. They are largely indifferent to the complex relationships between government jurisdictions, but do care about how much of their income is needed to support government spending. It's estimated that in 2002 about 17.2 cents out of every household dollar will be needed to support state and local government expenditures. The Ventura Administration will closely monitor this "price of government" indicator to ensure that we are not solving state budget pressures by simply shifting costs to local government, and that there is appropriate consideration of how government spending should be affected by changing economic conditions at all levels of government. According to State Auditor and DOR, local government revenue sources vary significantly. Local Property State General State Categorical Other Local Local Government Tax Aid Aid Revenue Sources Counties (99) 37% 6% 23% 33% Cities >2500 (00) 29% 21% 5% 45% Cities <2500 (00) 31% 33% 3% 32% School Districts (DOR) 25% 54% 12% 9% Contact: Patti Marquardt, MN Department of Finance—651-297-3616 patricia.marquardt@state.mn.us 10-Nov-00 STATE AND LOCAL PARTNERSHIP REFORM Description of Problem: There is plenty of evidence that state and local partnerships are out of alignment. Local government representatives frequently raise concerns about local budget pressures and availability of resources created by state mandates. Conversely, state policymakers are frustrated by undesignated aid from the state to local governments that do not produce expected outcomes. What is State and Local Partnership Reform? State and Local Partnership Reform is a logical extension of Tax Reform; as it • examines the complex web of government partnerships where the state finances all or part of locally delivered services, • modifies those partnerships that are out of alignment, • eliminates inappropriate and ineffective local mandates, • moves away from undesignated general aid and toward designated aid aimed at clear state priorities (i.e. mandates), The Ventura Administration wants government at all levels to be more accountable and responsive to the public. The best tool for doing this is to establish more clear lines of responsibility for setting policy, financing, and delivering government services. Aligning these responsibilities means Minnesota citizens will clearly know who is responsible for what, if it's • being done well, and who should be held responsible when programs aren't meeting measurable results. Outcomes: • Effectiveness — greater resources focused on the highest priority services. • Fairness—fairer cost-sharing of local services mandated by the state. • Accountability- clearer lines between policy and financial decision making. Principles: Do the right things and do them well: • Evaluate programs in tangible ways for real, cost effective results • Reform or eliminate programs if they are redundant or aren't producing desired results Provide incentives for desirable behavior: • Match responsibility and accountability at all levels • Put decisions at the appropriate level, closest to the people Be fiscally conservative and prudent: • Prevent future costs where possible Key Strategies: 1. Examine existing state/local relationships according to clear, defensible principles and then determine the most appropriate partnership and financing model for that relationship. 2. Trade existing general-purpose aids and expenditures (like LGA, HACA, and block grants) for specific state expenditures more closely aligned with both state and local priorities. • Contact: Department of Finance - Mike Roelofs - 651.296.5779 TAX REFORM What is tax reform? • Changing the state and local tax system to improve fairness, taxpayer understandability, government accountability, and global economic competitiveness. Reform Goals • Accountable - Realign the state and local tax and spending structure to promote better understanding and control by citizens. • Modern - Update the tax system to better fit a modern, technological, globally competitive economy. • Fair- Make and keep the overall tax system fair for Minnesotans of all income levels. • Simple - Make the property tax smaller, simpler, and more local. Reform Principles • Be fiscally conservative and prudent - insist that projected budgets are balanced. • Do the right things - reform or eliminate programs if they aren't producing desired results. • Provide incentives - match responsibility and accountability at all levels. Reform Options • Property Tax-make it smaller,simpler, and more local by eliminating the use of the local property tax for the state mandated portion of K12 general education funding - Target state aid to shared state-local services, provide revenue diversification options - Simplify the property classification system - Target property tax relief to those with less ability to pay - Reduce the high share of property taxes now paid by businesses, seasonal properties, rental housing, and other properties that bear a disproportionate burden • - Improve the accuracy of property tax assessments • Sales Tax-broaden the base and lower the rate - Broaden the sales tax base to include more services and goods - Lower the rate to be more like other states - Eliminate sales tax on most capital and inputs used for business production - Reduce the complexity and the number of exemptions - Stabilize the sales tax by addressing e-commerce issues • Income Tax-simplify the calculations and lower the rate - Broaden the income tax base - Lower the rates - Reduce the number of special preferences that benefit only a few - Eliminate biases based on a taxpayer's filing status Key Measures • Total property tax as a percent of state personal income should go down. • Property tax rate on business, seasonal, and rental housing should go down. • State sales tax rate should go down. • Measure of overall tax burden by income (Suits index) should remain proportional. • Percent of state general education formula funded with state funds should equal 100 percent. Contact Information • For more information about the tax reform initiative, see our website at www.taxes.state.mn.us, email us at. taxreform(a7state.mn.us, or call us at (651) 297-1577. You can also write us: Reform Taxes; do Commissioner Matt Smith; 600 North Robert Street; St. Paul, MN 55146.