1.1                          A bill for an act
  1.2             relating to local government aids; modifying the aid 
  1.3             formula for cities with a population of less than 
  1.4             2,500; amending Minnesota Statutes 1994, sections 
  1.5             477A.011, subdivisions 1a, 34, and 37; 477A.013, 
  1.6             subdivisions 8 and 9; and 477A.03; repealing Minnesota 
  1.7             Statutes 1994, section 477A.011, subdivision 33. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1994, section 477A.011, 
  1.10  subdivision 1a, is amended to read: 
  1.11     Subd. 1a.  [CITY.] "City" means a statutory or home rule 
  1.12  charter city.  "Small city" means a city with a population less 
  1.13  than 2,500.  "Large city" means a city with a population equal 
  1.14  to or greater than 2,500.  
  1.15     Sec. 2.  Minnesota Statutes 1994, section 477A.011, 
  1.16  subdivision 34, is amended to read: 
  1.17     Subd. 34.  [CITY REVENUE NEED.] (a) For a large city ~~with a~~ 
  1.18  ~~population equal to or greater than 2,500~~, "city revenue need" 
  1.19  is the sum of (1) 3.462312 times the pre-1940 housing 
  1.20  percentage; plus (2) 2.093826 times the commercial industrial 
  1.21  percentage; plus (3) 6.862552 times the population decline 
  1.22  percentage; plus (4) .00026 times the city population; plus (5) 
  1.23  152.0141. 
  1.24     (b) For a small city ~~with a population less than 2,500~~, 
  1.25  "city revenue need" is ~~the sum of (1) 1.795919 times the~~ 
  1.26  ~~pre-1940 housing percentage; plus (2) 1.562138 times the~~ 
  2.1   ~~commercial industrial percentage; plus (3) 4.177568 times the~~ 
  2.2   ~~population decline percentage; plus (4) 1.04013 times the~~ 
  2.3   ~~transformed population; minus (5) 107.475~~ (1) the sum of the 
  2.4   revenue base in the previous year for all cities, divided by (2) 
  2.5   the sum of the population for all cities. 
  2.6      (c) The city revenue need cannot be less than zero. 
  2.7      (d) ~~For calendar year 1995 and subsequent years,~~ The city 
  2.8   revenue need for a city, as determined in ~~paragraphs~~ 
  2.9   paragraph (a) ~~to (c)~~, is multiplied by the ratio of the annual 
  2.10  implicit price deflator for state and local government 
  2.11  purchases, as prepared by the United States Department of 
  2.12  Commerce, for the most recently available year to the 1993 
  2.13  implicit price deflator for state and local government purchases.
  2.14     Sec. 3.  Minnesota Statutes 1994, section 477A.011, 
  2.15  subdivision 37, is amended to read: 
  2.16     Subd. 37.  [BASE REDUCTION PERCENTAGE.] "Base reduction 
  2.17  percentage" is ~~(1) the difference between the amount available~~ 
  2.18  ~~for city aid under section 477A.03 for the year for which aid is~~ 
  2.19  ~~being calculated and the amount available for city aid under~~ 
  2.20  ~~section 477A.03 for calendar year 1994, (2) divided by the sum~~ 
  2.21  ~~of the city aid base for all cities and (3) multiplied by 100.~~  
  2.22  ~~The reduction percentage for any year may not be less than the~~ 
  2.23  ~~reduction percentage from the previous year.  For aid paid in~~ 
  2.24  ~~calendar year 1994, the reduction percentage is zero.  The~~ 
  2.25  ~~reduction percentage may not be more than 100 percent~~ 20 percent 
  2.26  for aid payable in 1996, 40 percent for aid payable in 1997, 60 
  2.27  percent for aid payable in 1998, 80 percent for aid payable in 
  2.28  1999, and 100 percent for aid payable in 2000 and thereafter. 
  2.29     Sec. 4.  Minnesota Statutes 1994, section 477A.013, 
  2.30  subdivision 8, is amended to read: 
  2.31     Subd. 8.  [CITY FORMULA AID.] ~~In calendar year 1994 and~~ 
  2.32  ~~subsequent years,~~ The formula aid for a city is equal to the 
  2.33  need increase percentage multiplied by the difference between 
  2.34  (1) the city's revenue need multiplied by its population, and 
  2.35  (2) the city's net tax capacity multiplied by the tax effort 
  2.36  rate.  No city may have a formula aid amount less than zero.  
  3.1   The need increase percentage must be the same for all cities.  
  3.2      ~~Notwithstanding the prior sentence, in 1995 only, the need~~ 
  3.3   ~~increase percentage for a city shall be twice the need increase~~ 
  3.4   ~~percentage applicable to other cities if:~~  
  3.5      ~~(1) the city, in 1992 or 1993, transferred an amount from~~ 
  3.6   ~~governmental funds to their sewer and water fund, and~~ 
  3.7      ~~(2) the amount transferred exceeded their net levy for~~ 
  3.8   ~~taxes payable in the year in which the transfer occurred.~~ 
  3.9      The applicable need increase percentage or percentages must 
  3.10  be calculated by the department of revenue so that the total of 
  3.11  the aid for small cities and the total of the aid for large 
  3.12  cities under subdivision 9 equals the total ~~amount~~ amounts 
  3.13  available for aid for each of these groups of cities under 
  3.14  section 477A.03.  
  3.15     Sec. 5.  Minnesota Statutes 1994, section 477A.013, 
  3.16  subdivision 9, is amended to read: 
  3.17     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
  3.18  ~~1994~~ 1996 and thereafter, each city shall receive an aid 
  3.19  distribution equal to the sum of (1) the city formula aid under 
  3.20  subdivision 8, and (2) (i) its city aid base multiplied by (ii) 
  3.21  100 percent minus the base reduction percentage. 
  3.22     (b) The percentage increase for a first class city in 
  3.23  calendar year 1995 and thereafter shall not exceed the 
  3.24  percentage increase in the sum of the aid to all cities under 
  3.25  this section in the current calendar year compared to the sum of 
  3.26  the aid to all cities in the previous year. 
  3.27     (c) The total aid for any city, except a first class city, 
  3.28  shall not exceed the sum of (1) ten percent of the city's net 
  3.29  levy for the year prior to the aid distribution plus (2) its 
  3.30  total aid in the previous year before any increases or decreases 
  3.31  under sections 16A.711, subdivision 5, and 477A.0132. 
  3.32     (d) ~~Notwithstanding paragraph (c), in 1995 only, for cities~~ 
  3.33  ~~which in 1992 or 1993 transferred an amount from governmental~~ 
  3.34  ~~funds to their sewer and water fund in an amount greater than~~ 
  3.35  ~~their net levy for taxes payable in the year in which the~~ 
  3.36  ~~transfer occurred, the total aid shall not exceed the sum of (1)~~ 
  4.1   ~~20 percent of the city's net levy for the year prior to the aid~~ 
  4.2   ~~distribution plus (2) its total aid in the previous year before~~ 
  4.3   ~~any increases or decreases under sections 16A.711, subdivision~~ 
  4.4   ~~5, and 477A.0132~~ The total aid for any city shall not be less 
  4.5   than its total aid in the previous year before any increases or 
  4.6   decreases under sections 16A.711, subdivision 5, and 477A.0132 
  4.7   minus ten percent of its net levy for the year prior to the aid 
  4.8   distribution. 
  4.9      Sec. 6.  Minnesota Statutes 1994, section 477A.03, is 
  4.10  amended to read: 
  4.11     477A.03 [APPROPRIATION.] 
  4.12     Subdivision 1.  [ANNUAL APPROPRIATION.] A sum sufficient to 
  4.13  discharge the duties imposed by sections 477A.011 to 477A.014 is 
  4.14  annually appropriated from the local government trust fund to 
  4.15  the commissioner of revenue.  For aid payable in 1994, the total 
  4.16  aid paid to cities under section 477A.013, subdivision 9, is 
  4.17  limited to $330,636,900.  For aid payable in 1995, the total aid 
  4.18  paid to cities under section 477A.013, subdivision 9, is limited 
  4.19  to $337,249,600.  ~~For aid payable in 1996 and thereafter, the~~ 
  4.20  ~~total aid paid to cities under section 477A.013, subdivision 9,~~ 
  4.21  ~~is limited to the amount paid in the previous year, adjusted for~~ 
  4.22  ~~inflation as provided under subdivision 3.~~ 
  4.23     Aid payments to counties under section 477A.0121 are 
  4.24  limited to $8,400,000 in 1994 and $10,000,000 in 1995.  For aid 
  4.25  payable in 1996 and thereafter, payments to counties under 
  4.26  section 477A.0121 are limited to the amount paid in the previous 
  4.27  year, adjusted for inflation as provided under subdivision 3. 
  4.28     For aid payable in 1995, payments to counties under section 
  4.29  477A.0122 are limited to $1,500,000.  For aids payable in 1996 
  4.30  and thereafter, payments to counties under section 477A.0122 are 
  4.31  limited to the amount paid in the previous year, adjusted for 
  4.32  inflation as provided under subdivision 3. 
  4.33     Subd. 2.  [ANNUAL APPROPRIATION.] A sum sufficient to 
  4.34  discharge the duties imposed by sections 477A.011 to 477A.014 is 
  4.35  annually appropriated from the general fund to the commissioner 
  4.36  of revenue.  For aids payable in 1996 and thereafter, the total 
  5.1   aids paid under sections ~~477A.013, subdivision 9,~~ 477A.0121~~,~~ and 
  5.2   477A.0122 are the amounts certified to be paid in the previous 
  5.3   year, adjusted for inflation as provided under subdivision 
  5.4   3.  For aids payable in 1996, the total aids paid to small 
  5.5   cities under section 477A.013, subdivision 9, is limited to 
  5.6   $86,016,272, and the total aids paid to large cities under 
  5.7   section 477A.013, subdivision 9, is limited to $290,170,442.  
  5.8   For aids payable in 1997 and thereafter, the amounts certified 
  5.9   to be paid to small cities and to large cities under section 
  5.10  477A.013, subdivision 9, are the amounts certified to be paid to 
  5.11  each group of cities in the previous year, adjusted for 
  5.12  inflation under subdivision 3. 
  5.13     Subd. 3.  [INFLATION ADJUSTMENT.] In 1996 and thereafter, 
  5.14  the amount paid under each section to be adjusted for inflation 
  5.15  shall be increased by an amount equal to: 
  5.16     (a) the amount certified to be paid under that section in 
  5.17  the previous year multiplied by 
  5.18     (b) one plus the percentage increase in the implicit price 
  5.19  deflator for state and local government purchases of goods and 
  5.20  services prepared by the Bureau of Economic Analysis of the 
  5.21  United States Department of Commerce for the 12-month period 
  5.22  ending March 31 of the previous year.  The percentage increase 
  5.23  used in this subdivision shall be no less than 2.5 percent and 
  5.24  no greater than 5.0 percent. 
  5.25     Sec. 7.  [REPEALER.] 
  5.26     Minnesota Statutes 1994, section 477A.011, subdivision 33, 
  5.27  is repealed. 
  5.28     Sec. 8.  [EFFECTIVE DATE.] 
  5.29     Sections 1 to 7 are effective for aids payable in 1996 and 
  5.30  thereafter.