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Chapter 289 improves transparency and preserves dedicated funds for their intended purposes.
(Published Aug 8, 2012)
One of the more positive 2012 legislative outcomes for cities was passage of a measure that partially restores Fire Safety Account funds and reduces the building permit fee. The law, Chapter 289 (SF 1983), is intended to protect dedicated funds from being transferred to the state’s general fund in the future.
Fire safety surcharge reduced, transfers eliminated
The Fire Safety Account is a dedicated account derived from a .65 percent surcharge on homeowners’ insurance premiums for the purpose of funding the State Fire Marshal’s Office, firefighter training activities, and regional fire service initiatives. Some of the Fire Safety Account funds have been administered as grants that, in part, have benefited cities.
The average homeowner pays $5.20 into the fund annually. In 2010, Gov. Pawlenty and the Legislature transferred more than $15 million from the account to help balance the state’s biennial budget. Gov. Dayton and the Legislature used about $8 million in the 2011 and 2012 biennium from the account for the same purpose.
Chapter 289 reduces the fire safety surcharge and eliminates future transfers to the state’s general fund. The surcharge on homeowners’, commercial fire, and commercial nonliability insurance policies will change from 0.65 percent to 0.5 percent beginning July 1, 2013. The new law also eliminates the ongoing general fund transfer from the Fire Safety Account to the general fund after fiscal year 2015. It specifies that the Legislature intends that all money in the Fire Safety Account be appropriated to the commissioner of the Department of Public Safety (DPS) to fund the State Fire Marshal’s Office and activities and programs under Minnesota Statutes, section 299F.012.
The law requires that by Jan. 15, 2014, the DPS commissioner must report to the chairs and ranking minority members of the legislative committees with jurisdiction over the Fire Safety Account regarding the balances and uses of the account.
Building permit surcharges reduced, transfers eliminated
A separate section of Chapter 289 relates to the Construction Code Fund, which is derived from the building permit fee surcharge. Since 1971, the building permit fee surcharge has been imposed on all permits issued by municipalities in connection with the construction of or addition or alteration to buildings and equipment or appurtenances. The funds flowing into the Construction Code Fund were managed by the Department of Labor and Industry (DLI) and used to administer and enforce the state’s building code. Until recently, the building permit fee was fixed at 50 cents. Beginning in 2007, the state began an annual transfer of $1.515 million from the Construction Code Fund to the general fund, and in 2011, the surcharge was temporarily increased to $5 while the fund transfers continued.
Chapter 289 sets the building permit surcharge at $1 beginning in 2015. Until 2015, the building permit surcharge remains at $5. It also establishes June 30, 2015, as the end date for the annual general fund transfer to occur.
The League believes both of these measures improve transparency and, perhaps more importantly, preserve dedicated funds for their intended purposes.
Contact Anne Finn
Assistant IGR Director
(651) 281-1263 or (800) 925-1122
Each edition of the Focus on New Laws column highlights a law passed in the 2012 legislative session that cities need to know about. Please be sure to always consult your city attorney with technical questions about compliance with laws. For more information about new laws, check out the League’s 2012 Law Summaries (pdf).