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It is further unclear on what impact LGA might have on levy limits. The language included in the new <br />36 <br />law suggests that that the 3% levy limit increase is reduced by any LGA appropriation the City <br />37 <br />receives. Assuming for example that the City’s levy could increase by $400,000 under levy limits, it <br />38 <br />might get reduced by the $225,000 in LGA leaving us with a maximum levy increase of only $175,000. <br />39 <br />40 <br />The imposition of Levy limits under this scenario could effectively prevent the City from increasing <br />41 <br />funding for its tax-supported capital replacement programs or for any new initiative. City Staff expects <br />42 <br />to have a more refined calculation by the end of June, however the ‘official’ calculation as determined <br />43 <br />by the MN Department of Revenue is not scheduled to be released until much later. Under the new <br />44 <br />st <br />Law, the Department of Revenue has until September 1 to notify cities what their certified levy limit <br />45 <br />is. <br />46 <br />47 <br />Sales Tax Exemption <br />48 <br />All Minnesota cities will be exempt from paying sales tax on most purchases effective January 1, 2014. <br />49 <br />This change restores the exemption that had been in place prior to the mid 1990’s when the exemption <br />50 <br />was removed as part of a larger package of budget fixes at the state level. <br />51 <br />52 <br />It is estimated that this will ‘save’ the City approximately $225,000 annually, with about $70,000 <br />53 <br />coming from the property tax-supported programs. There are a few notable exceptions to the sales tax <br />54 <br />exemption including purchases that are associated with functions or services that are also offered by the <br />55 <br />private sector. The City’s golf course is one such exception and there could be others. <br />56 <br />57 <br />PERA Contribution Increases <br />58 <br />Effective January 1, 2014 the City contribution towards the Police and Firefighter PERA pension plan <br />59 <br />will increase from 14.4% of employee wages to 15.3% in 2014, and 16.2% the following year. For <br />60 <br />2014, the budgetary impact is approximately $36,000. This will require a corresponding increase in the <br />61 <br />property tax levy. <br />62 <br />63 <br />The City expects to receive further guidance on these legislative impacts from the League of MN Cities <br />64 <br />th <br />beginning June 17. City Staff will keep the Council apprised of these changes as new information is <br />65 <br />made available. <br />66 <br />PO <br />OLICYBJECTIVE <br />67 <br />Not applicable. <br />68 <br />FI <br />INANCIAL MPACTS <br />69 <br />See above. <br />70 <br />SR <br />TAFF ECOMMENDATION <br />71 <br />Not applicable. <br />72 <br />RCA <br />EQUESTED OUNCIL CTION <br />73 <br />For discussion purposes only. No formal action is required. <br />74 <br />75 <br />Prepared by: Chris Miller, Finance Director <br />Attachments: A: Not applicable. <br />Page 2 of 2 <br /> <br />