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Measures of City Capacity & Need: Overview and Formula Analysis

This document provides an overview of city capacity and need, focusing on property tax relief, core services, diversity of needs, and more. It analyzes the current formula, distribution, and factors influencing city funding.

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Measures of City Capacity & Need: Overview and Formula Analysis

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  1. Measures of city capacity & need Eric Willette & Nick Greene For Mayors LGA Advisory Group June 8, 2012

  2. Road Map Overview

  3. Purpose / Goals Review • What we think we’ve heard so far • Provide property tax relief • Ensure ability to provide core services (esp. public safety and public works) • Increase reliability and stability • Recognize diversity of needs and capacity • Encourage innovation and cooperation • Simplify formula

  4. Cluster Background • Clusters group cities according to region, size, property wealth, income and growth patterns • Updating needed but still show general trends • For ease of use, we’ve combined clusters into 3 metro and 5 Greater MN categories

  5. Cluster Background, Part 2

  6. Distribution Formula Overview • Current need-capacity formula • Aid bases

  7. Local Government Aid Per Capitaaverage 2008-2010 All city per capita average = $103

  8. Per Capita City Revenuesaverage 2008-2010

  9. City Property Tax Ratesaverage 2008-2010

  10. Property Tax Per Capita & City Tax Rates average 2008-2010

  11. Property Tax and LGA Per Capita & City Tax Rates average 2008-2010

  12. Property Tax Base Per Capita and City Tax Rate average 2008-2010

  13. City Property Tax BasePer Capitaby county2008-2010

  14. Median Household Income (2010)

  15. LGA and Sales Tax ($ millions) 1Based on Department of Revenue sales tax statistics for 136 cities 2Based on average LGA received 2008-2010 3 Based on average taxable sales 2008-2010 at a rate of 0.717% 4 City specific sales tax data is not available for cities with smaller populations and business counts Source: Department of Revenue

  16. Per Capita Net Revenue Change from Replacing LGA with 0.717% Sales Tax

  17. LGA Per Capita & Sales Tax Per Capitaaverage 2008-2010

  18. City Spending Per Capita by major category, average 2008-2010

  19. Public Safety Spending Per Capita average 2008-2010

  20. Streets & Highways Spending Per Capita average 2008-2010

  21. Formula Factors of Need

  22. Other measures of Overburden

  23. Public Safety City Spending Per Capita & Jobs Per Capita average 2008-2010

  24. Public Safety and Streets City Spending Per Capita & Tax Exempt Property average 2008-2010

  25. Median Household Income (2010) and LGA Per Capita (2008-2010)

  26. Wrapping Up • LGA cities raise less property tax with higher tax rates and spend more • Property tax base is more uniform than sales tax base among cities • Higher spending on public safety and public works is correlated with several overburden measures

  27. Wrapping Up (continued) • Cities have diverse needs and capacities • What you measure depends on the program goal or goals • Multiple goals and many variables results in a complicated formula • A more simple formula must ignore some relevant differences among cities

  28. Thank you • Eric Willetteeric.willette@state.mn.us • Nick Greenenick.greene@state.mn.us

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