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ExecutiveSummary:StudyoftheMetropolitanAreaFiscalDisparitiesProgram <br />FortheMinnesotaDepartmentofRevenue <br />CategoryIV:OpenSpacePreservationandConservation <br />GreenAcresProgram <br />o <br />RuralPreserveProgram <br />o <br />AgPreservesCredit <br />o <br />OpenSpaceProperty <br />o <br />AgriculturalHomesteadMarketValueCredit <br />o <br />PaymentsinLieuofTaxes(PILT) <br />o <br />SustainableForestIncentiveAct <br />o <br />FISCAL DISPARITIES PROGRAM OVERVIEW <br />TheMinnesotaFiscalDisparitiesActof1971wasanattempttoaddressgrowingfiscalconcernswithin <br />thesevencountyMinneapolisSt.Paulregion.Thelaw,whichtookeffect35yearsagoaftersurviving <br />twocourtchallenges,requiredallcommunitiesinthesevencountyareatocontribute40percentofthe <br />growthafter1971intheircommercialindustrialtaxbasetoaregionalpool.By2011,theFiscal <br />Disparitiesprogramincluded$420.7millionofsharedtaxbaseresultingin$544.1millionintaxrevenue <br />4 <br />generatedacrossalltaxingjurisdictions. <br />Thedistributionofthepoolisbasedonfiscalcapacity,definedasequalizedmarketvaluepercapita.This <br />meansthat: <br />Ifthe’Ò“z-z¦Œz·äx­fiscalcapacityisthesameasthemetropolitanaverage,itspercentageshare <br />ofthepoolwillbethesameasitsshareofthe©;x­population; <br />Ifitsfiscalcapacityisabovethemetroaverage,itssharewillbesmaller;and <br />5 <br />Ifitsfiscalcapacityisbelowthemetroaverage,itssharewillbelarger. <br /> <br />AllunitsoflocalgovernmentintheFiscalDisparitiesprogramareparticipants,includingcities,counties, <br />schooldistricts,andspecialdistricts.Eachjurisdictiondeterminesitslevyneeds(i.e.,theamountof <br />propertytaxesneededtoprovideitsdesiredlevelofservices)andthendeterminesthepropertytaxrate <br />basedonthelevyandnettaxcapacityinthetaxingunit.WithouttheFiscalDisparitiesprogram,therate <br />wouldbedeterminedbasedonthetaxbaseofthejurisdiction,withnocontributionordistributionof <br />taxbase.WiththeFiscalDisparitiesprogram,thetax©·;““7,Ò©7;““z­determinedbasedonan <br />adjustednettaxcapacity.Taxpayersinjurisdictionscontributingmorethantheyreceive(net <br />contributors),paymorethantheir†Ò©z­7z-·zš“x­levy,andthosereceivingmorethantheycontribute(net <br />6 <br />recipients)payless. <br />4 <br />MetropolitanCouncil. <br />5 <br />HinzeandBaker,2005. <br />6 <br />FromHinzeandBaker,2005;thisreportalsoprovidesadetaileddescriptionoftheFiscalDisparitiesformula. <br />13 <br /> <br />