Cities must certify their final levy to the county by Dec. 30.
(Published Dec 9, 2013)
The final step in this year’s levy limit process will occur over the next week when the Minnesota Department of Revenue will notify cities of the final status of their levy limit and approved special levies. All cities with populations of 2,500 or more are subject to levy limits for 2014.
All cities must certify their final levy to the county within five working days after Dec. 20, which this year is Dec. 30. If a city fails to certify its final property tax levy by that date, the county will set the levy at the previous year level (see Minnesota Statutes, section 275.07).
Due to the streamlined levy limit calculation process enacted by the 2013 Legislature, the 2014 levy limit is computed in a different manner than past levy limits. The most significant difference in the calculation of the 2014 levy limit is that a city’s final levy limit cannot be less than the greater of the city’s 2012 or 2013 certified property tax levy. In other words, after subtracting special levies from the city’s 2012 or 2013 certified levy, adding local government aid (LGA) for the respective year, inflating the result by 3 percent, and subtracting the new 2014 LGA amount, the law states that the resulting levy limit cannot be less than the greater of the city’s 2012 or 2013 total certified levy.
For many cities, this calculation means that the final 2014 levy limit will be the greater of the city’s 2012 or 2013 actual total certified net tax capacity levy for all purposes, which includes special levies. However, in addition to the allowable levy under the levy limit, each city is permitted to levy all necessary “special” levies for 2014. The largest category of special levies for many cities is related to debt service and certificates of indebtedness. These levies are authorized outside the levy limit to essentially avoid having the levy limit affect the ability of the city to repay debt obligations.
Although there are other special levies, such as levies for natural disaster response, not all traditional special levies were permitted under this year’s levy limit. For example, cities have been traditionally allowed to declare levies related to pension contribution increases as special levies. However, the 2014 increase in the employer contribution for Public Employees Retirement Association-covered police and firefighters (from 14.4 percent of salary to 15.3 percent of salary) is not an allowable special levy for 2014.
Under current law, levy limits will expire after the levies are set this fall, for collection in 2014.
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Contact Gary Carlson
(651) 281-1255 or (800) 925-1122