Tax Base Sharing

Written in 1979, this archival report was published as a Land Policy Roundtable and is Case Studies Series number 303.

The nation’s first experience with tax base sharing was in the twin cities (Minneapolis-Saint Paul) metropolitan area of Minnesota. In 1971 the Minnesota State Legislature enacted the Metropolitan Fiscal Disparities Act (Minn. Statutes, Ch. 273F) that established a tax base sharing plan for the seven-county metropolitan area. Under the legislation all jurisdictions within the area share 40% of the areawide growth of commercial-industrial tax base. This report discusses the statute’s origins, implementation, and effects.

Table of Contents

I. Introduction

II. The Minnesota Statute

A. Background: Why Base Sharing?
B. Formulation: Implementing an Innovation
C. Challenge: Constitutionality of the Statute
D. Exploration: The Elements of a Base-Sharing Scheme

III. An Idea in Action: Effects of the Statute

A. Fiscal Disparities

1. Constitutional Limitations
2. Effects of the Minnesota Statute on Fiscal Disparities
3. Evaluation of the Plan’s Operation

B. Land Use Effects

1. Fiscal Zoning
2. Location Decisions
3. Open Space

C. Base-Sharing and Public Services

IV. Conclusion