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The bills propose new requirements for communicating city budget and levy plans with residents.
(Published Apr 15, 2013)
Last week, the House Taxes Committee considered two bills that would make significant modifications to the Minnesota tax hearing and notification law, commonly referred to as the truth-in-taxation process.
Rep. Davnie’s bill
The first bill, HF 1724 (Rep. Jim Davnie, DFL-Minneapolis), would repeal the 25-year-old preliminary property tax notification statement, also known as truth-in-taxation statement, and replace it with a hearing requirement for cities with populations greater than 2,500, as well as for all counties, school districts, and metropolitan special taxing districts.
Under the new hearing requirement, impacted local units of government, including cities, would be required to hold a public hearing on or before Sept. 1 to discuss the proposed budget and levy. The public hearing would have to be held prior to the adoption of the final proposed levy and budget. The hearing would have to occur after 6 p.m., and must include an opportunity for the public to comment on the proposed levy and budget.
At the hearing, each taxing jurisdiction would be required to provide information including but not limited to: (1) the jurisdiction’s estimated proposed levy, prior year final levy, and the percent change; (2) the tax rate for the jurisdiction's estimated proposed levy, current year tax rate, and the percent change; and (3) a statement of reason for the increase or decrease from the prior year's levy, including the four most significant factors resulting in the change, and an accounting of the distribution of levy proceeds from the prior year.
In addition to the information listed above, counties would also be required to provide a property percentile summary statement, consolidated for all applicable taxing jurisdictions, that identifies the proposed tax and current year tax. The exact format of the additional information in the percentile summary statement would be prescribed by the commissioner of the Department of Revenue.
The elimination of the proposed tax notice could reduce costs for cities. Under current law, one-third of the costs of administering the existing tax hearing and notification law that are not covered by the state are apportioned to cities.
Notice of the budget meeting and the same budget and levy information required to be presented at the new hearing must also be published on the taxing jurisdiction's website within five days prior to the hearing and the same information must be published in a newspaper with countywide circulation within 10 days prior to the hearing. The proposal also permits taxing jurisdictions to utilize any available social media to provide notice of its budget meeting.
The proposed changes in the tax hearing process would be effective for the levies and budgets proposed by local units of government this fall for taxes payable in 2014.
A wide array of cities submitted comments on the bill. For example, many cities suggested that the tax base information, including information on the impact of the fiscal disparities programs in the seven-county metro area and on the Iron Range, would not be available. And other cities indicated that it is difficult to have accurate information by September on such items as labor contracts and health care costs. Several cities suggested that the parcel-specific notice serves an important function, and that taxpayers may be disappointed if the notice was repealed. The League shared comments and concerns with the bill’s author.
The bill was laid over for possible inclusion in the House omnibus tax bill.
Rep. Marquart’s bill
The second bill, HF 1570 (Rep. Paul Marquart, DFL-Dilworth), would require cities with a population over 2,500 to publish on their website a “preliminary proposed budget” prior to Sept. 1, and would require the local unit of government to hold a public hearing after Sept. 1 that:
In addition, prior to the hearing, each jurisdiction must publish information about the hearing on its website, as well as in the official newspaper of the taxing authority. The hearing and publication requirement are in addition to all currently required hearings and notices.
The League testified on the bill, raising concerns that the legislation would impose additional and potentially significant costs on cities, most notably due to the publication requirement and due to the fact that the hearing must be distributed electronically via television or over the Internet. Although most cities over 2,500 in population have a city website, it is unclear how many of these city websites are capable of video broadcast and whether city council chambers have video capability.
The bill was laid over for possible inclusion in the omnibus tax bill.
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