This morning the Senate Taxes Committee released its omnibus bill. Here’s a few of the key ways that the bill would affect cities:

Local Government Aid.  The bill reduces LGA to the 2010 paid level or certified 2011 whichever is less for 2011 and 2012.  In 2013 and thereafter LGA is funded at $426 million on the formula.

Market Value Credit. Under the bill, in 2011 cities will receive that same level of MVC reimbursement as they did in 2010.  In 2012 and thereafter the program converts from a credit on total property taxes to a reduction in a homeowner’s tax capacity, thus not requiring any reimbursements from the state to local governments.

Local Option Sales Tax.  The bill allows cities, through a referendum, to impose local sales taxes up to 0.5% for selected capital improvement projects.  Projects include: conventions and civic centers, public libraries, parks, trails and recreational centers, overpass, arterial and collector roads, or bridges on, adjacent to, or connecting a Minnesota state highway system, railroad overpasses or crossing safety improvements, flood control, water quality projects addressing groundwater and drinking water pollution problems, court facilities, fire, law enforcement or public safety facilities, or municipal buildings.

Cities that impose a local option sale tax will have an LGA offset.  The offset will come only from the regional center aid and jobs base aid portion of the LGA formula.  The offset will be equal to the revenue generated from the sales tax, but cannot be more than their total of regional center aid and jobs base aid.  This offset only applies to local sales taxes imposed or renewed after June 30, 2011.

Consolidation Grants.  The bill also provides $3.5 million in fiscal years 2012 and 2013 to local governments to help offset cost of consolidation. The maximum grant is $100,000.

The senate bill language can be found here

The Senate bill spreadsheet can be found here

A summary of the Senate bill can be found here

You can also access runs for the bill below:

Senate Tax Bill LGA Run

Senate Tax Bill Jobs and Regional Center Aid Run

Senate Tax Bill MVC Conversion Example