Agenda Packet Cc - work session 6/23/2025

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RELEVANT LINKS: League of Minnesota Cities Handbook for Minnesota Cities 9/10/2024 Municipal Budgeting Chapter 20 | Page 13 Minn. Stat. § 477A.011. Minn. Stat. Ch. 275. Minn. Stat. § 275.70, subd. 5. Handbook, Property Tax Levy. • Payment of all estimated expenditures, including an allowance for a reserve and the amount necessary to make all city contributions to the Public Employees’ Retirement Association (PERA). • Current expenditure liabilities the city cannot pay in the present year for lack of current funds or that the city will pay through short-term borrowing. • Repayment of all tax anticipation certificates the city issued during present and past years. • An amount in anticipation of any reduction or loss of state aid, federal revenue, or other undependable sources of revenue. • For the payment of interest and repayment of principal on bond issues before the bonds are delivered. (Bonds issued previously are already funded by a portion of the city levy). 3. Gambling taxes and funds Minn. Stat. § 349.213, subd. 3. Cities may impose up to a 3 percent local gambling tax on licensed gambling organizations in order to cover the cost of regulating lawful gambling. A city may not use these tax revenues for any other purpose. Minn. Stat. § 349.213, subd. 1(a). Cities may also require organizations conducting lawful gambling to contribute 10 percent of their net profits derived from lawful gambling to a city-administered fund to be disbursed for lawful purposes. State law defines lawful purpose. Such funds cannot be used for the benefit of a pension or retirement fund. See LMC information memo, Lawful Gambling. For further discussion of lawful gambling expenditures and regulation, see LMC information memo, Lawful Gambling. B. Franchise fees Minn. Stat. § 216B.36. 47 U.S.C.A. § 542. Accounting Manual for Small Cities and Towns in Minnesota. Cities are authorized to impose a franchise fee on utility services, such as gas, electric, and cable television. Franchise fees for gas and electric utilities are subject to negotiation. Cable franchise fees are limited to no more than 5 percent of the cable operator’s gross revenues over a 12-month period. Uniform Chart of Accounts, Office of the State Auditor. The revenues from franchise fees can be useful in offsetting a city’s costs to regulate these businesses and maintain and protect the public right-of-way. The state auditor classifies franchise fees as “other taxes.” C. License and permit revenue Handbook, City Licensing. Another source of revenue for cities come from license and permit fees. Cities should be conservative when estimating these amounts as they can vary considerably from year to year. Municipal licensing should not be viewed as a significant source of revenue. 22