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F) OPPOSE LIMITED MARKET VALUE In addition to limiting property tax levies and freezing property taxes, the idea of placing artificial limits on market value increases on homes has gained momentum during the past three legislative sessions. Initiated by cabin owners, the limited market value concept has been expanded to include all homeowners. Provisions limiting market value growth will cause inequities and shifting burdens in the property tax system. Uipon the sale of a home, the market value for tax purposes rises to the true market value. Two identical homes located next to each other could pay significantly different property taxes if one home was recently purchased while the other had an artificially computed market value for tax purposes. Limited market value also fails to target relief to those most in need of assistance, provides no guarantee that tax bills won't increase as a result of changes in the tax rate, and discourages new home ownership by shifting burdens. A recent study by the Citizens League concluded that limited market value is an unwise method of providing property tax relief, and that limited market value laws should be allowed to sunset. The report states that a system based on market value should in fact be based upon market value, without artificial limits that make the system more complex. Finally, limited market value is detrimental to growing suburbs because the local tax rate will need to increase to cover expanded service needs due to population growth. Therefore, the MLC opposes any legislation that attempts to statutorily limit market value on homes. G) LOCAL GOVERNMENT AID To achieve increased equity in the transfer payment system, the local government aid (LGA) formula needs to be revised. Since residents of each city contribute to the transfer payment system through sales and income taxes paid, the LGA formula should be altered to provide for a method of equitable redistribution. The MLC strongly emphasizes that the current LGA formula needs a serious overhaul. The MLC will work with the Legislature and Administration to develop a new formula that is more understandable, equitable and balanced. H) FISCAL DISPARITIES The metro area's fiscal disparities program causes a number of concerns for some MLC members. Many of the arguments used in support of the original fiscal disparities law in the early 1970s are no longer valid. Therefore, the Legislature should reexamine the need for the fiscal disparities program. If the program is not repealed, the Legislature should, at a' minimum, change the way the program operates. The MLC supports the following: • Legislation that would set a maximum contribution level for fiscal disparities purposes at fifteen percent (15%) of a city's total tax capacity. This proposal would not reduce the current distribution amount to any city. It would simply freeze a city's contribution amount until its tax base increased to the level where the city would