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1g. Creating a New Property Taxpayers' Trust Fund in MN , C ITYOF CHANHASSEN 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 ' (612) 937 -1900 • FAX (612) 937 -5739 MEMORANDUM TO: Mayor and City Council ' FROM: Don Ashworth, City Manager ' DATE: September 28, 1992 SUBJ: Local Government Trust Fund, Resolution Supporting Constitutional Amendment ' Dedicating Monies to the Trust Fund ' Both Mayor Chmiel and myself support the attached "Resolution Concerning a Constitutional Amendment to Create a New Property Taxpayers' Trust Fund in Minnesota." Hopefully, through passage of the resolution and the establishment of the Constitutional amendment, we can stop the state ' from further eroding the revenues of local government. In 1967, the state enacted a 3% sales tax with the promise to voters that the money would be returned to them in the form of lower property tax relief for property taxpayers. For the City of Chanhassen, this amount of money equalled approximately $550,000 in 1986 -87. However, with continued state budgetary problems, the amount of money dispersed back to cities was continually reduced until in 1990 the City of Chanhassen received nothing. In 1991, the state legislature authorized counties to increase the sales tax from 6% to 61/2% with the ' promise that 2% of the sale tax would be dedicated to the local government trust fund. The additional caveat was that cities would be required to pay sales tax on purchases made by them. (The 1 2% plus our 6 would therefore pay for the 2%© being dedicated.) The trust fund currently provides monies ' to pay the state's commitment to: 1) those cities still receiving local government aid (primarily outstate communities), and 2) to pay the state's share of homestead credit (primarily metropolitan). Reductions in the property tax formula, i.e. reducing the top bracket from 3% to 2 %, and for 1992 from 2 to 2%, has dramatically increased the state's commitment to homestead credit payments, i.e. for 1993, the amount due to the City of Chanhassen for homestead credit relief totals approximately $900,000. The City of Chanhassen did not create homestead credit. We have not received one additional dollar in any of the years that the state legislature has dabbled with the property tax formulas and changed their commitment to homestead credit payments. Given past history and current fiscal conditions, the state will almost assuredly attempt to raid the trust fund and force cities to recoup dollars lost through future property tax increases. To ensure that this doesn't happen, it is vitally important that cities band together and attempt to force the state into establishing the trust fund as a Constitutional amendment guaranteeing that the 2¢ will in fact be dedicated to property tax relief as promised to voters in 1967 and 1991. Approval of the attached resolution iecommended. ' t4 PRINTED ON RECYCLED PAPER Il 4 (. (,„ •• CITY OF SAINT PAUL 4/ 0/ 1 d =-u'! OFFICE OF THE CITY COUNCIL r /1 A: . GGGIII BOB LONG J t1 ;111/e I Counc�lmember . August 31, 1992 1 Dear Mayor: 1 As a local elected official responsible for delivering essential services to your constituents, I am sure you are concerned about the continuing attacks on the property tax relief funds in the Local Government Trust Fund. These attacks threaten to force local governments 1 to either drastically cut services or dramatically increase property taxes. If your constituents are anything like mine you will agree that neither of these options will be acceptable. 1 We need to act now to protect the Local Government Trust Fund from the reductions or elimination that will be proposed in the 1993 legislative session. The most effective way to do this is through a constitutional amendment dedicating 2 cents of the sales tax to property I tax relief. These funds would be used to create a new Property Taxpayers' Trust Fund which would guarantee that the property tax relief funds originally sent to the Local Government Trust Fund would be used for property tax relief as was originally promised I by the Governor and the Legislature. With the 1992 legislative campaigns getting into full swing and candidates from both parties looking for support, this is the year to get legislative I commitments for a Constitutional Amendment. I am enclosing a sample resolution similar to one passed recently by the Saint Paul City I Council and several other city councils around the state. The resolution calls for a Constitutional Amendment dedicating funding to a new Property Taxpayers' Trust Fund and requesting the League of Minnesota Cities to make such an Amendment one of their I priorities in 1993. I am asking that your City Council consider passing a similar Resolution during the next month so that we can begin talking with legislators. In addition to sending a copy of your Resolution to the League, please also send me a copy so we can keep track 1 of which cities have acted. Cities need a stable source of revenue not dependent on the property tax and not subject I to the political debate between the Governor and the Legislature that seems to go on every year. Now that the sales tax has been raised to 6 1/2 percent and that sales tax is now applied to local government purchases all in the name of saving property tax relief I programs, we must act to ensure that such property tax relief does in fact come to property taxpayers from a new Property Taxpayers' Trust Fund. 1 1 CITY HALL SEVENTH FLOOR SAINT PAUL, MINNESOTA 55102 612/298 -4473 S agatitp 46 1 Printed on Recycled Paper 1 In addition, I am enclosing three other items for your information: n, g you use and uifo tion: 1) a petition for the Minnesota Property Taxpayers' Association (please get signatures and return to me); 2) a list of cities who have passed the resolution; and 3) a list of legislators who authored 1 bills supporting a constitutional amendment during the 1992 Legislative Session. Thank you for your consideration of the Resolution. If you have any questions, please call 1 me at 298 -4473. Best regards, 1 RQ\ 1 BOWLONG Councilmember I 1 1 1 1 1 1 1 1 1 1 1 1 Council File # Green Sheet # RESOLUTION CITY OF , MINNESOTA ' Presented By Referred To Committee: Date 1 Resolution Concerning a Constitutional Amendment I 32 to Create a New Property Taxpayers' Trust Fund in Minnesota ' 4 WHEREAS, the State of Minnesota enacted a 3% State sales tax in 1967 with the promise to voters 6 that the money would be returned to them in the in the form of lower property tax relief for property 6 tax payers; and 1 7 WHEREAS, in 1991 the Governor and State Legislature approved the addition of a 1/2% increase in 8 the State sales tax, raising it from 6% to 61% with 2e dedicated to fund the Local Government Trust I 9 Fund which was created to continue the State's commitment to local property tax relief; and 10 WHEREAS, in 1992, the Governor and State Legislature extended the 61% sales tax to local 1 11 government purchases with the promise of continued property tax relief through the Local 12 Government Trust Fund; and ' 13 WHEREAS, each year local governments are forced to combat continued attempts to reduce the 14 levels of State revenue dedicated to local property tax relief through cuts in programs such as Local 15 Government Aid; and I 16 WHEREAS, it is anticipated that the State will face another budget deficit in 1993, making cuts in 17 local property tax relief programs tempting ways to solve the State's budget problems; and I 18 WHEREAS, Governor Carlson has already publicly announced that he will concentrate on eliminating ▪ 19 local property tax relief programs during the upcoming legislative session; and 20 WHEREAS, the League of Minnesota Cities and the Association of Metropolitan Municipalities have 21 taken positions supporting a constitutional amendment dedicating 2¢ of each 61/2c collected from the I 22 State sales tax to the Local Government Trust Fund if such dedication cannot be assured statutorily; 23 now, therefore, be it 1 24 RESOLVED, that the City of calls upon the State Legislature to support a 25 constitutional amendment dedicating 24 of each 61/20 collected by the State sales tax to a new Property 26 Taxpayers' Trust Fund, to guarantee continued property tax relief from the current Local Government • 27 Trust Fund; and be it further • 28 RESOLVED, that the City of strongly urges that the League of Minnesota Cities and the 29 Association of Metropolitan Municipalities make one of their 1993 priorities support for a 30 constitutional amendment dedicating 2C of each 61/2c collected by the State sales tax to a new Property 1 31 Taxpayers' Trust Fund; and be it further 1 RESOLVED, that the City requests that the League of Minnesota Cities begin coordinating a series of 1 1 state -wide 'Truth in Taxation" meetings with property taxpayers, to be held this fall, to educate the public and candidates for State elected offices on the issues regarding the need for a constitutional 1 amendment dedicating 2e of each 64c collected by the State sales tax a new Property Taxpayers' Trust Fund to protect local property tax relief funds from budget cuts during the 1993 Legislative Session. 1 1 1 1 1 1 1 1 1 I Yeas Nays Absent Requested by Department of: �__.. By: 1 Adopted by Council: Date Form Approved by City Attorney 1 Adoption Certified by Council Secretary B B y : Approved by Mayor for Submission to 1 Approved by Mayor: Date Council By: B y : .1 II 1 August 28, 1992 I CITIES ADOPTING RESOLUTION SUPPORTING CONSTITUTIONAL AMENDMENT DEDICATING 2 CENTS OF STATE SALES TAX FOR PROPERTY TAX RELIEF I CITY (population) DATE OF ADOPTION BUHL (915) July 7, 1992 I CRYSTAL (23,788) July 21, 1992 I FAIRFAX (1,276) July 7, 1992 FAIRMONT (11,265) Aug. 8, 1992 FALCON HEIGHTS (5,380) Aug. 12, 1992 GRAND MARAIS (1,171) Aug. 12, 1992 1 KEEWATIN (1,118) July 8, 1992 1 MANKATO (31,477) July 27, 1992 MINNEAPOLIS- IGR Cmte. unanimously Res. scheduled to be heard (368,383) recommended Resolution before full Council I MOORHEAD (32,295) July 20, 1992 1 NORTH SAINT PAUL (12,376) August 3, 1992 SAINT CLOUD (48,812) July 20, 1992 1 SAINT PAUL (272,235) May 26, 1992 TWO HARBORS (3,651) August 24, 1992 1 WINNEBAGO (1,565) Aug. 12, 1992 II WINONA (25,399) July 20, 1992 WORTHINGTON (9,977) July 27. 1992 1 Total Population Represented 851,083 1 II 1 1 1 STATE LEGISLATORS WHO AUTHORED BILLS SUPPORTING CONSTITUTIONAL AMENDMENTS DURING THE 1992 LEGISLATIVE SESSION Legislative Legislator Ill District Hometown Anderson, Iry HF 2289 HD 3A International Falls Bauerly, Jerry HF 2290 HD 18B Sauk Rapids Beard, Pat HF 2241 HD 56B Cottage Grove Bertram, Jeff HF 2405 HD 16B Paynesville Bettermann, Hilda HF 2241 HD 11B Brandon Bodahl, Larry HF 2292 HD 35B Waconia Brown, Chuck HF 2291 HD 11A Appleton , Dauner, Marvin HF 2291 HD 9B Hawley Frederickson, D.J. SF 2519 SD 20 Murdock Garcia, Edwina HF 2290 HD 40A Richfield Hasskamp, Kris HF 2241 HD 13A Crosby 1 Jacobs, Joel HF 2291 HD 49B Coon Rapids Johnson, Bob HF 2290 HD 4A Bemidji Kalis, Henry HF 2405 HD 29B Walters Kelso, Becky HF 2292 HD 36A Shakopee Kinkel, Tony HF 2291 HD 4B Park Rapids Lasley, Harold HF 2292 HD 19A Cambridge Lessard, Bob SF 2519 SD 3 International Falls Marian, Carlos HF 2241 HD 65B St. Paul Milbert, Robert HF 2289 HD 39B South St. Paul Nelson, Syd HF 2291 HD 12A Sebeka Ogren, Paul HF 2289 HD 14A Aitken Olson, Katy HF 2405 HD 28B Sherbprn Olson, Edgar HF 2289 HD 2B Fosston Ostrom, Don HF 2292 HD 23B St. Peter Rest, Ann HF 2289 HD 46A New Hope Segal, Gloria HF 2626 HD 44B St. Louis Park Solberg, Loren HF 2405 HD 3B Bovey Sparby, Wally HF 2290 HD 1B Thief River Falls Steensma, Andy HF 2292 HD 27B Luverne Thompson, Loren HF 2241 HD 10A Waubun Wenzel, Steve HF 2290 HD 13A Little Falls Winter, Ted HF 2405 HD 28A Fulda 1 1 1 THE MINNESOTA PROPERTY TAXPAYERS' ASSOCIATION ' The Minnesota Property Taxpayers' Association is a non - profit organization committed to protecting the interests of residential and commercial property taxpayers in Minnesota and preserving the state's property tax relief programs which have ' been funded since 1967 with state sales tax revenue. The Minnesota Property Taxpayers Association supports a state Constitutional Amendment to dedicate 20 of each 6 %0 of sales ' tax collected by the state to a new Property Taxpayers' Trust Fund to guarantee future property tax relief payments to Minnesota's property taxpayers. 1 We the undersigned do hereby become a member of the Minnesota Property Taxpayers' Association and indicate our individual support 1 for a Constitutional Amendment dedicating 20 of each 61/2 sales tax ' collected by the state to a Property Taxpayers' Trust Fund to protect our property tax relief payments in the future. 1 NAME(signature) ADDRESS PHONE 1. 2. 3. 1 4. F 1 6. 1 7. 8. 1 9. 10. 1