Metropolitan Revenue Distribution Act (1971)

Topics: Economic/Small Business | legislation

The Minnesota legislature passed this regional tax law “to improve the revenue raising and distribution system in the seven-county Twin Cities area to accomplish the following objectives:
(1) to provide a way for local governments to share in the resources generated by the growth of the area, without removing any resources which local governments already have;
(2) to increase the likelihood of orderly urban development by reducing the impact of fiscal considerations on the location of business and residential growth and of highways, transit facilities and airports;
(3) to establish incentives for all parts of the area to work for the growth of the area as a whole;
(4) to provide a way whereby the area’s resources can be made available within and through the existing system of local governments and local decision making;
(5) to help communities in different stages of development by making resources increasingly available to communities at those early stages of development and redevelopment when financial pressures on them are the greatest; and
(6) to encourage protection of the environment by reducing the impact of fiscal considerations so that flood plains can be protected and land for parks and open space can be preserved.” This is very complex law that requires each community in the 7 counties to contribute a certain percentage of their property tax base growth into a regional pool. Funds in the pool are then redistributed based on a formula of population and property valuation per capita. Each town’s “fiscal capacity” is defined as its property valuation divided by its population. That figure is then compared to the “average fiscal capacity” of all towns in the region, which is the sum of the valuations of all municipalities divided by the sum of their populations. This law was proposed as a way to protect open space by making it less profitable for any one community to attempt to load up its tax base with large commercial projects.