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RELEVANT LINKS: <br />League of Minnesota Cities Handbook for Minnesota Cities 9/10/2024 <br />Municipal Budgeting Chapter 20 | Page 14 <br /> In Minnesota, license fees must approximate the direct and indirect costs in <br />issuing the license and policing the licensed activities. <br /> D. Intergovernmental revenue <br /> 1. Local government aid <br />LMC website, LGA 101, <br /> <br />LMC website, History of <br />Local Government Aid to <br />Cities, <br />For some cities, local government aid (LGA) from the state is a significant <br />source of income. The goal of LGA is to equalize cities’ ability to provide <br />an average level of services at reasonable property tax rates. <br /> <br />LMC website, LGA Formula <br />Key Points. <br /> <br />LMC website, Dates for City <br />Budgets 101. <br />A complex formula determines how much LGA each city receives. The <br />Minnesota Department of Revenue certifies how much LGA each city <br />receives by Aug. 1 of each year. Cities receive two annual LGA payments— <br />one in mid-July and the other at the end of December. <br />Minn. Stat. § 477A.014. <br /> <br />Minnesota Department of <br />Revenue: Local Government <br />Aid (LGA) and Annexations, <br />Boundary Changes, or <br />Changes in Form of <br />Government. <br />The commissioner of the Department of Revenue notifies each city of its <br />LGA distribution during the first week of August. Cities have 60 days to <br />appeal the calculation or factors used in the computation. Special <br />considerations apply for cities dealing with annexation or a change in the <br />form of city government. <br /> 2. Market value homestead credit ended in 2011 <br /> The Legislature eliminated the market value homestead credit (MVHC) <br />program effective for tax year 2012. The main problem with the program for <br />cities had been that the state did not always reimburse the entire amount of <br />the credit. <br /> Thus, cities did not receive the full amount they levied in a given year. The <br />program was replaced by the homestead market value exclusion. <br /> 3. Homestead market value exclusion <br />Minn. Stat. § 273.13, subd. <br />35. <br /> <br />Minnesota Department of <br />Revenue: Homestead <br />Classification. <br />The homestead market value exclusion (HMVE) program replaced the <br />MVHC program for taxes payable in 2012 and beyond. This means that <br />what the city levies is what the city receives directly from property owners <br />(less any amount that property owners fail to pay). This law is effective for <br />taxes payable in 2012 and thereafter. <br />House Research: The <br />Homestead Market Value <br />Exclusion. <br />In place of the MVHC program, homeowners will receive an exclusion of a <br />portion of the estimated market value of their house from property taxes. <br />The exclusion is computed in a manner similar to the market value <br />homestead credit. <br />23