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HomeMy WebLinkAboutDevelop Legislative Agenda for 2013 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Develop a legislative agenda for 2013 Date: May 21, 2012 BACKGROUND: The following items have been identified by our staff as potential items for the city to participate in the upcoming 2013 legislative session. I propose we briefly discuss this list, add any issues the commission would like to be considered and eliminate any items the commission has no interest in pursuing. From there, we can provide background on each topic, finalize our legislative agenda and begin talking with legislative candidates regarding their willingness to assist us in accomplishing our goals. 1) Gallatin College – issues regarding tax levies for colleges of technology and community colleges. The city of Bozeman’s funding commitment expires June 30, 2013. 2) Entitlement share - frozen for the past two years while the State is sitting on a surplus. 3) 4 cent local option sales tax on prepared food, prepared drinks, hotels & motels. 100% of the collected tax must be used to reduce property taxes. 80% used to reduce city/town mill levy and 20% used by the surrounding counties to reduce county mill levies. 4) Urban Transit Levy – The city has dedicated 1 mill to funding Streamline. Should the petition threshold be amended to assist in a public vote to create a transit district? 5) Community Climate Action – Property assessed clean energy bond legislation, Architecture 14x stimulus legislation, barriers to taxi permitting, opt out of phone book delivery, financial incentives for renewable energy applications to current net-metering customers. 6) Records – Electronic records and utilization of the “cloud”. 7) Exempt Wells and their effects on land use, development and clean water. 8) Utility Rate notification amendment – allow us to email notifications with customers who volunteer for electronic bill delivery. 9) 76-1-108 – City-county planning board as a zoning commission. The city council may at its discretion require the city-county planning board to function as the zoning commission authorized under 76-2-307. 10) 76-2-402. Local zoning regulations -- application to agencies. Whenever an agency proposes to use public land contrary to local zoning regulations, a public hearing, as defined below, shall be held. (1) The local board of adjustments, as provided in this chapter, shall hold a hearing within 30 days of the date the agency gives notice to the board of its intent to develop land contrary to local zoning regulations. A local government may designate another entity to conduct the public hearing. (2) The board or other entity shall have no power to deny the proposed use but shall act only to allow a public forum for comment on the proposed use. (3) Zoning standards and procedures which do not prohibit the proposed use apply. A public agency claiming an exemption from a standard or procedure pursuant to this section shall provide to the zoning authority a statement of why the exemption being sought is required in order to provide the proposed use. The statement shall be provided at the same time the notice of intent to develop land contrary to local zoning regulations is given, 11) Medical Marijuana and DUI FISCAL EFFECTS: None at this time. ALTERNATIVES: As defined by the city commission 1 Montana League of Cities and Towns 2012 District Legislative Meetings The prospects that the 2013 Legislature will fairly consider the serious finance issues facing local governments are much brighter now that the state is out from under the long shadow of an estimated $250-million state general fund deficit. Early in May, the fiscal division projected a general fund surplus of $427-million. This cushion is the product of tax collections that are running well ahead of the estimates used to set the budget for the current cycle. The 2011 Legislature met under extreme, and some might say fabricated, budget circumstances. It eliminated programs, reduced services, imposed mandates and broke promises. The general fund is now flush with cash, but this does not mean that a fair share will go where it will do the most good --- back to the cities, towns and counties that simply do not have the money to manage energy development, refinance the pension system, comply with mandates or assume state responsibilities for other programs and services. Entitlement Program – The Legislature enacted the Entitlement Program in 2001 with the commitment that it would stand behind the distribution formula. This promise lasted 10 years. It was broken to solve a financial crisis that was caused by the “Great Recession” and extremely pessimistic revenue projections. The growth factor on entitlement shares was iced for two years and replaced with a new formula that should be more responsive to economic conditions, particularly personal and corporate income tax collections. There is a good possibility that entitlement share payments to cities and towns will increase by about 3% in the two years of the next biennium. Cities and towns must insist that the Legislature honor this “new promise”. We also have to work to assure that the 2013 Legislature fully funds the reimbursements to local governments tied to the most recent reduction in Business Equipment Taxes. Treasure State Endowment Program – There were several attempts during and after the 2011 Legislature to pilfer money from the endowment account. The Governor proposed suspending the program for two years. He also line-item vetoed several projects, but a district court judge reinstated the funds that were appropriated by the Legislature. The entitlement program is the most important of a limited list of grant programs that smaller cities and towns can use to manage economic impacts and buy down the costs of complying with wastewater standards and other state and federal environmental regulations. Since 1992, TSEP has bought down the cost of capital projects for cities and counties across the state. There was never enough money in the pot to cover all of the requests, but many times it was the difference between a workable project and a pipe dream. Cities must be prepared to defend TSEP, because it protects public health and safety and puts people to work. 2 Refinancing Public Employee Pensions – The Public Employee Pension System is running a deficit of approximately $1.6-billion and the cost of bringing assets and liabilities into actuarial balance is estimated at $118 million per year far out into the future. This is a lot of money and it is certain that cities and towns that are members of PERS will share some of these costs. The big questions now are: “how much for how long?” The Governor has proposed what he calls an “incremental solution”. Under the plan, public agency and employee contributions to PERS would increase 1% annually. Local governments would also be required to make a down payment of about $20-million from a pot of “mystery money” that has not yet been identified. There are 3,200 municipal employees of the 29,000 members of the retirement system. The covered payroll for cities and towns is estimated at about $118-million, which means that every 1% increase in city contributions would cost about $1.2- million or about $380 per employee. There has also been discussion of raising employer contributions by as much as 5.45%. This would cover the full amount of the “actuarially required contribution”. This extreme proposal would increase municipal costs by $6.54-million each year. It would represent the largest property tax increase and service reduction mandated against municipal governments in the history of Montana. The pension deficit did not occur suddenly. It has been accumulating over time as the Legislature boosted benefits and two recessions knocked down the value of the investment portfolio by more than $1.3 billion. If and when the economy recovers, investment earnings will increase, and the numbers that are being used now to estimate the cost of actuarial balance will be irrelevant. The costs and complications of this problem suggest a measured approach to assure that the solution is fair, affordable and effective. Oil Development Impacts – The high plains have been discovered again as an oil boom touched off by high prices and new technology has crossed the Eastern Border of our state with the possibility of extending all the way West to the Rocky Mountain Front. There are huge deposits of recoverable oil in the Williston Basin and other locations across the prairies. This latest development could bring a new beginning in places that have long been ignored, or it could be another page in the hit, run and to hell with the consequences history of resource extraction in Montana. The answer to this question depends on how well the small cities and towns and rural counties of Eastern and Central Montana manage the impacts of what could be the biggest thing that ever came their way. 3 Unfortunately, cities and town are totally unprepared to handle a boom that will blow through the capacity of services and programs that were intended for much smaller and more stable populations. The state collects almost $250-million each year in taxes and federal royalties on oil and gas production. Municipal governments in 32 oil producing counties receive about $2-million of this bounty. These cities and towns will deal with many if not most of the impacts of development, but the pittance that comes back to them from oil tax accounts is not enough to make more than a minimum deposit against the costs of programs and services necessary to accommodate a large transient population. Oil is taxed like property. The money goes where the production occurs, and cities and towns don’t get a count. A special committee of the League, made up of mayors, council members and staff from cities in the path of the oil boom, has been analyzing various proposals to get the money to those places where it is needed the most – communities that are trying to manage heavy impacts with not a lot more than a few buckets and brooms. The following is a list of some of the ideas that have been discussed: 1. The proposal offered by the Governor to set up a special impact account for cities and towns paid for by $12 million in oil tax revenue that was transferred to the general fund in 2011 to help balance the state budget. 2. Increase the distribution of Federal Mineral Royalty Payments to local governments. Currently, 25% or about $10-million of the federal money is distributed to producing counties, and it has been suggested that a similar or even larger percentage be committed to cities and towns for impact assistance. 3. Increase the tax rate on new production to one-half the level paid on wells that have been producing for more than 18-months. The higher rate would generate more than $10-million a year that could be committed to impact assistance. 4. Establish an impact assistance account with a portion of the $427-million state surplus. A lot of this money was siphoned out of the oil patch and some of it should go back for local services, programs and facilities. 5. Dedicate oil tax revenues above a base line for impact management. This proposal offers the symmetrical logic that links up increased production and higher tax collections with heavier impacts. 6. Allow cities and towns to collect a surcharge on transient lodging, because development attracts people who exert pressure on services but do not pay local taxes in Montana. The resort tax option would also be a fair and effective way to pay for services required by transient populations. 4 Impact assistance accounts should be well aimed but sufficiently flexible to deal with actual conditions on the ground in Eastern and Central Montana. They should include dedicated revenue streams for cities and towns in producing counties and a competitive grant program to finance special projects, facilities and services connected to oil development. There seems to be an understanding among most legislative incumbents and candidates that cities and towns simply do not have the money to manage the consequences of large scale development. They know that the tax codes and distribution formulas don’t get the money to the places where it is needed, and there is a reasonable prospect that this recognition will pay dividends next winter. Special Districts – In 2009, the Legislature passed a measure that revised the codes that apply to the management of special districts. This law was introduced at the request of the Association of Counties, but it included a provision that allows cities to create recreation and park maintenance districts without a public vote. A bill that would have made it almost impossible to operate special districts for park maintenance and most other facilities and services was killed on the floor of the House. Similar legislation could be introduced in 2013. Land Use – In recent sessions of the Legislature cities have been challenged by a sequence of bills that would have repealed, amended or otherwise complicated land use laws that have no purpose beyond promoting common sense development practices. It is likely that members will introduce an odd collection of bills to revise every aspect of land use from annexation to zoning. These laws have been on the books for many years. They have been proven in practice and the Legislature is beginning to understand that most of the suggested changes are not needed or will not work. An interim committee is working to untangle a knot of controversy over the application of subdivision laws to the rent or lease of certain properties. These transactions should not be an issue in cities and towns that have zoning regulations.