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<br />City of Centerville <br />City Council Meeting <br />December 30, 2008 <br /> <br />Last year, the reserve funds got very low (a projected $400 million short for the <br />biennium ending June 2008). As a result, the government had to reduce Local Aids <br />and Credits, and Centerville took a hit on the Homestead Credit. A total of <br />approximately $271 million was cut from the budget, including the $110 million <br />for Local Aids and Credits, as well as many cuts in various other areas. <br />There is a ban on in-state and out-of-state travel for the Senate, which will save $1 <br />million. <br />A $4-5 billion deficit has been projected. This may be the first biennium in 30 <br />years that the State will spend less in the upcoming 2 years than in the previous 2 <br />years. To avoid raising taxes by $1,200 per person, the Governor suggested an <br />option to restructure, consider selling some State assets, or consider leasing part of <br />them out to a private company (possibly St. Paul/Minneapolis International <br />Airport). Another option used by some other States, but not suggested by the <br />Governor, would be turning 35W over to a private company to operate and let them <br />take tolls from it. <br /> <br />Mayor Capra stated that there would be a $43,000 impact on Centerville's total budget of <br />$2 million, which would have to be made up in some fashion. She added that with fuel <br />costs down, it may soften the City's budget. <br /> <br />Councilmember Lee stated that Centerville did not get much Local Government Aid as <br />comparable cities and suggested that the Legislature look at this. This year Centerville <br />only received $22,000, and next year they will receive $0. <br /> <br />City Administrator Larson stated that Local Government Aid is given to the City and the <br />homestead credit is given to homeowner. He pointed out that these are distinctly different, <br />and they should be categorized differently. <br /> <br />Mayor Capra inquired whether there was any discussion about loosening some of the <br />mandates. <br /> <br />Senator Vandeveer stated that a lot of property tax is masked and used by the State to <br />accomplish other things. He stated that property tax is a more glaring issue with the <br />homeowners because it has risen more than the rate of inflation. Watershed Districts are <br />not State-wide and its members are appointed by counties, so they have very little <br />oversight. Once Watershed members are selected (but not elected), they can raise property <br />taxes, pretty much without limit. He suggested that Watershed budgets should be <br />approved by the counties in which they are located, and advised that he has submitted a <br />proposal regarding this issue. Senator Vandeveer commented that the State hides a lot of <br />programs behind property taxes and more transparency is needed to fix this. <br /> <br />Councilmember Paar inquired whether there was any possibly of basing property taxes on <br />income rather than property value. <br /> <br />Senator Vandeveer replied the assumption is that the higher the home value, the more <br />income the owner has, which is not necessarily true. The Senate has looked at some ability <br /> <br />Page 3 of 11 <br />