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REQUEST FOR COUNCIL ACTION <br /> Date: 06/10/13 <br /> Item No.: 12.b <br />Department Approval City Manager Approval <br />Item Description: Receive Update on Legislative Impacts on the 2014 Budget <br />B <br />ACKGROUND <br />1 <br />In the past couple of years, the MN Legislative Session ended with relatively few, and only minor, <br />2 <br />impacts on the City’s Budget. The 2013 session however is dramatically different in a number of <br />3 <br />substantive ways. The following items will have a financial impact on the City’s 2014 Budget: <br />4 <br />5 <br />Local Government Aid (LGA) formula modification; $225,000 annually to Roseville. <br />6 <br />Levy limits reinstated for 2014 only. <br />7 <br />Sales tax exemption for Cities reinstated with some exceptions. <br />8 <br />Mandatory PERA contribution increase for Police & Fire employees <br />9 <br />10 <br />Each of the budget impact items are described in greater detail below. <br />11 <br />12 <br />Local Government Aid (LGA) <br />13 <br />The City of Roseville has not been a recipient of LGA or other general-purpose state aid for many <br />14 <br />years. However, the funding formula that determines which cities receive LGA was changed during the <br />15 <br />recent legislative session. The change in the formula that is applicable to Roseville now factors in the <br />16 <br />number of pre-1970 homes in our housing stock, whereas the previous emphasis was on pre-1940 <br />17 <br />homes. <br />18 <br />19 <br />The most recent estimate put out by the MN Department of Revenue suggests that the City is poised to <br />20 <br />receive $225,000 in LGA in 2014. It is suggested that the City refrain from using these monies for any <br />21 <br />day-to-day operations to avoid become reliant on what has historically been an unreliable revenue <br />22 <br />source. It would be more advisable to use the monies for capital replacements or other non-recurring <br />23 <br />needs. However, this may not be practical for 2014 given other legislative impacts (see Levy Limit <br />24 <br />discussion below.) <br />25 <br />26 <br />Levy Limits <br />27 <br />Levy limits have been reinstated for the 2014 budget year for all cities with a population in excess of <br />28 <br />2,500. Generally speaking, the City is limited to increasing its base levy amount by a maximum of 3%. <br />29 <br />Under the new law, there is explicit authority to increase the levy beyond the 3% for debt service and <br />30 <br />natural disaster response measures. Historically there have been other exemptions to levy limits such as <br />31 <br />police and firefighter wages and benefits. However, an initial read of the new law suggests that those <br />32 <br />exemptions were excluded for 2014. <br />33 <br />34 <br />35 <br />Page 1 of 2 <br /> <br />