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HomeMy WebLinkAbout13.E.2. Municipal Legislative Commission MembershipTO: FROM: SUBJECT: DATE: CITY OF SHAKOPEE Memorandum Mayor and City Council Mark McNeill, City Administrator Municipal Legislative Commission Membership December 7, 2010 Comment: Introduction: The Council is asked to authorize City membership in the Municipal Legislative Commission. Background: As part of the discussion for the 2011 budget, staff presented an invitation from the Municipal Legislative Commission (MLC) to have Shakopee join as a member beginning in 2011. Savage, and two other suburbs were invited to join as well. The MLC was established in 1984, and has provided advocacy at the Legislature for its fourteen suburban city members. There are 765,000 residents, and over 500,000 employees who live and work in MLC member cities. Compared to the League of Minnesota Cities and Metro Cities groups, the MLC is fairly narrowly focused in its mission. As shown in its 2010 Legislative initiatives (attached), the MLC philosophy is: • The Legislature must constantly strive to develop policies promoting greater stability and predictability and fiscal relationship between the State and local units of government. • Whenever it is possible and efficient to do so, public services should be provided by the level of government closest to those affected. • The system, created by the State to finance city services must be equitable, accountable, and straight forward. The 2010 MLC Legislative priorities focused on accountability in the State and City fiscal relationship; sought to stimulate job retention and growth; and provide practical solutions to mitigate recessionary impacts to cities. Descriptions of the MLC policies are attached. Budget Impact: As an incentive for Shakopee to join the MLC, an offer has been made to join the MLC for one -half of the normal annual dues for the first year, which is $3950. That amount was provided in the 2011 preliminary budget. 3 E L • A continuation of the City's membership beyond this year would need to be made by the Council during future budgetary processes. Recommendation: I recommend that the City join the MLC, beginning in 2011. Relationship to Visioning: This supports Goal D, "Maintain, Improve, and Create Strong Partnerships with other Private and Public Sector Entities ". Action Required: If the Council concurs, it should, by motion, accept the invitation to join the membership of the Municipal Legislative Commission, beginning in 2011. Vim ( 1 tt,„LL( Mark McNeill City Administrator MLC GENERAL PHILOSOPHY & GUIDING PRINCIPLES The Municipal Legislative Commission (MLC) was established in 1984 and now provides a voice for the more than 765,000 residents and about 503,000 employees who work in our fourteen suburban communities. Our communities aren't all the same: some are growing rapidly while others are fully developed; some are primarily residential communities while others contain significant commercial developments. Despite those differences, we share common demographic, economic and tax base characteristics. We also face similar challenges associated with development and maintenance of public infrastructure, and increasing demand from residents and businesses for effective public services. Finally, our communities share a common philosophy with respect to the relationship between the state and local units of government. We believe that: • The Legislature must constantly strive to develop policies promoting greater stability and predictability in the fiscal relationship between the state and local units of government. • When it is possible and efficient to do so, public services should be provided by the level of government closest to those affected. • The system created by the State to finance city services must be equitable, accountable and straight forward. Our communities pledge their support of a comprehensive approach to addressing ongoing challenges such as public safety, transportation, economic development, and affordable housing. In order to succeed in these endeavors, local governments must be provided with effective tools (including financial) and the flexibility to use them without unfunded mandates from other units of government. The MLC urges its legislative delegation to be mindful of the following guiding principles when deliberating on tax, finance or regional growth initiatives: • In order to promote accountability, local government finance should demonstrate a strong relationship between taxes paid and benefits received; • Unfunded state mandates, levy limits, property tax freeze and reverse referenda significantly limit the predictability necessary for local governments to plan with financial confidence. • Cities characterized with high property values are not universally populated with high - income residents. Populations in all of our cities include retirees on fixed incomes, single parents and apartment dwellers. The number of seniors in our communities is rising. Policies that ignore such diversity are not equitable; and • Any tax reform creates burden shifts on individual taxpayers and potential revenue shortfalls for communities and should be recognized and addressed by the state in order to maintain the stability of our local governments. i i i i � MUNICIPAL I ME COMMISSION I I I I I I Approved by the MLC Board of Directors on 01/04/2010 2010 LEGISLATIVE PROGRAM SUMMARY OF 2010 LEGISLATIVE PRIORITIES I. Promote Accountability in the State & Local Fiscal Relationship A. Eliminate MVHC program and convert proceeds directly to aid homeowners and to address the State deficit B. Study fiscal disparities program paid for by fiscal disparities pool C. Support sound LGA principles II. Invest in Job Retention and Growth A. Support highway and transit investments 1. State GO. bonding investments in highway and transit projects that will help leverage job growth 2. Support public /private partnerships for interchange improvements 3. Authorize public /private partnerships for transit oriented development i. Authorize pilot project for funding Transit Improvement Areas B. Support funding to Department of Employment & Economic Development for job retention and growth C. Support Tax Increment Financing (TIF) district extensions III. Provide Practical Solutions to Mitigate "Great Recession" Impacts to Cities A. Allow cities to do a mid - year actuarial analysis for volunteer fire relief association's unfunded liabilities B. Reprioritize real estate forfeiture statute to place higher priority on municipal recover of unpaid utility charges and building or development fees 1 2010 LEGISLATIVE INITIATIVES The Municipal Legislative Commission (MLC) has identified the following issue areas as priorities for the 2010 Legislative Session: I. Promote accountability in the state & local fiscal relationship II. Invest in job retention and growth III. Provide practical solutions to mitigate "Great Recession" impacts to cities 1. Promote Accountability in the State & Local Fiscal Relationship ' A. Eliminate MVHC program and convert proceeds directly to aid homeowners and to address the State deficit i i i i Currently, the State spends almost $300 million reimbursing counties, cities and school districts for MVHC. Based on the $1.2 billion deficit being projected for FY 2010 -11, as well as the significant projected state budget deficit in FY 2012- 13, the MLC believes it would be prudent to take a serious look at whether the State can afford the MVHC program. Savings generated from eliminating this program could be used to help offset the State budget deficit, as well as to aid homeowners directly on providing property tax relief. The property tax refund program ( "circuit breaker ") could be enhanced by the savings generated from the MVHC program to provide relief to individuals who need it most (income tested) regardless of where they live. The MLC strongly recommends that the Legislature act this session (2010) to address the growing state deficit, as well as provide local governments with budget planning predictability. B. Study fiscal disparities program, paid for by fiscal disparities pool In 1971, the State of Minnesota instituted a program of commercial - industrial tax base sharing within the Twin Cities metropolitan area. The Twin Cities area fiscal disparities program shares 40 percent of the growth in the commercial - industrial property tax base of the seven county metro area. Many arguments used in support of the original fiscal disparities law in the early 1970s may no longer be valid. MLC cities ask the State to reexamine this program, specifically asking the following: • How has the program affected property tax disparities across the area? • Are the contribution and distribution formulas reasonable? • Does the program help promote orderly growth and sound land use? • What is the effect of the program on competition for commercial - industrial development between communities? • Do contributions to the pool prevent local governments from generating sufficient revenues from commercial - industrial development to cover the costs of providing services? • Should the pre -1971 commercial- industrial base continue to be excluded from the formula? • Could improvements be made in program administration? The MLC recommends using the fiscal disparities pool to fund the study of the program. C. Support sound principles on LGA The LGA program has undergone many changes since it was enacted in 1971. It has gone from a revenue sharing program to measuring inequities in city need and fiscal capacity. The measurements of "need" have also been revised to help reduce the stimulative effects of the aid program. Last year, the Legislature approved the formation of an LGA Study Group. The study group is charged to determine what the goals of the LGA program are, and whether or not the program, in its current form, is meeting those goals. MLC cities do not receive LGA. However, our members believe the LGA program should adhere to the following principles: 1. Equitable — an effective LGA formula should provide similar amounts of aid to similarly situated cities (minimize mechanisms such as "grandfathers" and minimum/maximum aid amounts). 2. Neutral — the LGA program should not encourage cities to spend more than it would otherwise need to for basic services. LGA should be based on factors outside of the individual city's control. 3. Simple and Understandable — attempting to address every unique and special problem with each of the 855 cities in Minnesota causes the LGA formula to be too complex. Factors used to determine aid should have general support and understanding from cities and their citizens. 4. Ability to Provide Adequate Revenue — an effective formula should grow with general city costs, stay relatively stable, and should be based on factors for which we have accurate information and whose values do not wildly fluctuate from year to year. II. Invest in Job Retention and Growth MLC cities are critical job producers for the region. In fact, our cities combined are among the biggest job producing areas in the state with over 503,000 employees (compared to Minneapolis /St. Paul with a combined total of 474,200 employees) Our Association believes that the State can play a critical role in keeping and growing jobs by making key investments, and by supporting and partnering with cities. A jobs focus will help cities promote a healthy business environment, which will keep and grow jobs here rather than having companies move to a more competitive state. A. Support highway and transit investments The MLC strongly encourages the State to support: 1. State General Obligation bonding investments in highway and transit projects that will help leverage job growth (i.e. local bridges, Iocal roads with regional significance, Cedar Avenue BRT, Southwest Light Rail Transit...). Note — a majority of highway projects are funded through Trunk Highway bonds as opposed to State G.O. bonds. 2. Public /private partnerships for interchange investments 3. Legislation that would authorize public /private partnerships for transit oriented development i. Implement a pilot project authorizing funding mechanisms for Transit Improvement Areas In 2008, DEED was authorized to establish Transit Improvement Areas. Transit Improvement Areas include parcels of land that are located in part within one -half mile of a transit station. This language was initiated by communities concerned about the lack of tools available to shape development around major transit stations. Although the language passed and was signed into law, there was no funding put into place to implement the new program. The MLC supports the implementation of a pilot project with the authorization of funding mechanisms, such as TIF, tax abatement, bonding and general fund appropriations for a revolving loan or grant program. B. Support funding to DEED for job retention and growth DEED has several funds that are used for grants and loans to retain high- quality jobs in Minnesota. The largest of these funds is the Minnesota Investment Fund, which focuses on industrial, manufacturing and technology- related industries to improve state and local economic vitality (i.e. Medtronic in 2001, Coloplast in 2006, and most recently Innovative Surfaces in 2009). Loans are paid back I The Metropolitan Council, Metro Stars: Employment Summary, 2000 -2008, January 2009, <http://www.metrocouncil.org/metroarea/Employment08.pdf> directly into the fund, making it nearly self - sufficient. In FY 2009, approximately $2 million was loaned out to qualifying businesses from the Minnesota Investment Fund. The Legislature has appropriated $1 - $4 million into the fund since its creation, but has also cut their investment when faced with a budget crisis. The MLC requests the State to maintain its commitment to job creation and retention by investing in DEED, and not make cuts to the Minnesota Investment Fund to balance the budget deficit. Doing h and strong would like to heir private future sector that we want to retain their businesses, usinesses expansion to occur in Minnesota. C. Support Tax Increment Financing (TIF) district extensions TIF remains one of the most viable tools available to fund community reinvestment efforts. Further restrictions of TIF would render the tool less effective and will likely curtail local efforts to support job creation. In light of the recent economic and development downturns, cities need greater flexibility to use TIF effectively to support the economic viability of their business and residential communities. 1. Allow term extensions for redevelopment districts Recent credit/development market conditions have delays for some TIF projects. To help offset losses the MLC would like to see the State allow redevelopment districts which are taking longer to the current economic crisis. caused unprecedented to local governments, term extensions for develop as a result of III. Provide Practical Solutions to Mitigate "Great Recession" Impacts to Cities A. Allow cities to do a mid -year actuarial analysis for volunteer fire relief association's unfunded liabilities Under current law, if a volunteer fire relief association has an unfunded actuarial liability, the city is required to address 1 /10 of the shortfall in the following calendar year's budget. The actuarial study is required to be presented to the city council by August 1st so the council can incorporate any additional levy into the next year's budget. The valuation of assets is calculated as of December 31 of the prior year. Many cities complain that on December 31 2008, the fund was at a low point for valuation of fund investments, and did not accurately reflect the true condition of the fund throughout the year. The MLC supports legislation that ould allow s true unfunded ra actuarial analysis, providing a more accurate picture of the B. Reprioritize real estate forfeiture statute to place a higher priority on municipal recovery of unpaid utility charges and building or development fees Under current law, the net proceeds from the sale or rental of forfeited land must be apportioned as follows: 40% to the county, 40% to the school district, and 20% to the city or town. Based on the county- focused priority structure, cities are at times unable to recover unpaid taxes and utilities. The MLC supports changing the forfeiture statute (M.S. 282.08) to give the proceed distribution priority to a city's unpaid charges for electricity, water and sewer, as well as building and development fees, when the forfeited property is located within a city. The League of Minnesota Cities is also supportive of this change, and our organizations will be working together to implement this statutory change.