Tax-Base Sharing – Metropolitan Revenue Distribution, MN

Commonly referred to as the Fiscal Disparities Program, regional tax-base sharing was implemented in the seven-county Twin Cities metro in 1971. Each community contributes 40 percent of the growth of its commercial and industrial property tax base after 1971 to a regional pool. The funds are redistributed based on a formula that takes into account a jurisdiction’s population and fiscal capacity(defined as per capita real property valuation).

Accordingto former Minnesota State Representative Myron Orfield, an expert on regional revenue-sharing, the system has reduced tax-base disparities among Twin Cities communities from 50:1 to roughly 12:1.  The system has not eliminated disparities, because 60 percent of any new revenue from commercial development remains in the host community. The Metropolitan Council reports the program has led to twice as many cities gaining revenue (119) than those cities losing revenue (61). Approximately 32 percent of the region’s commerical/industrial tax-base is shared, making up 10 percent of the region’s total tax base.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.