The new law allows local government units to establish fire protection districts as special taxing districts.
On July 1, Gov. Tim Walz signed into law the 2021 omnibus tax bill (Chapter 14, First Special Session). Included in Chapter 14 is an amendment to Minnesota Statutes, section 144F.01, to include authorization for local government units to create fire protection special taxation districts in addition to existing authority to create special taxing districts for emergency medical services. The fire protection district authorization was effective July 2, 2021.
The League has been working with the Minnesota State Fire Chiefs Association to establish the fire protection district option. The original legislation was modeled, in part, on the 2009 special legislation (Session Laws 2009, Chapter 88, Art. 2, Sect. 46) that authorized the city of Cloquet and surrounding jurisdictions to establish a fire protection district. The fire protection district option would allow local units of government to realize operational efficiencies and address staffing issues that can be challenging for stand-alone fire departments.
Creation of fire protection districts
Any two or more local government units, defined as cities, counties, and townships, may create a fire protection district through a resolution adopted by the governing body of each participating jurisdiction. Considerations when creating a district include:
- Prior to the district’s creation, the participating jurisdictions must enter into an agreement that specifies how the liabilities of the district will be handled in the case of the district’s dissolution.
- The agreement may also address how its tax levy will be apportioned between the participating jurisdictions, if not spread evenly.
- A district can only be associated with one fire relief association or one account in the voluntary statewide volunteer firefighting retirement plan.
- The district need not be contiguous or have continuous borders.
Governance of fire protection districts
The district’s governing body must be comprised of elected officials from each participating jurisdiction’s governing body in the proportion set in the district’s enabling resolution, subject to change in the district’s charter or bylaws. The new law also sets out a process for addition of participating jurisdictions, withdrawal of participating jurisdictions, and dissolution of an existing district.
Taxing and debt issuance authority
A district has authority to levy a tax on real and personal property in the district. Levy proceeds must be used to provide fire protection, emergency medical services, or both, as well as provide for the district’s debt service. In addition, the district may issue debt under Minnesota Statutes Chapter 475 related to the function of the fire protection district and may exercise any other powers available to participating jurisdictions in the district. A district follows the same process a city does regarding levy certification, including a public hearing.
The property tax levy to finance district operations may be spread and collected in one of two manners:
- Property tax is levied against all properties within the district at a set tax rate.
- Alternatively, the district can opt to allocate the levy to each participating jurisdiction under a formula considering factors such as population, number of service calls, costs of providing service, the market value of improvements, or other measures approved by the governing body of each of the participating political subdivisions.
- Under this alternative, the amount of the levy allocated to each political subdivision must be added to that political subdivision’s levy and spread at the same time and in the same manner as provided by law for all other property taxes. The proceeds of the levy would be remitted to the district after receipt of property taxes by the participating jurisdiction.
The authorization to establish a district also requires local government units and newly established districts to individually submit levy and expenditure reports to the Minnesota Department of Revenue and to House and Senate Tax Committees. The report must also include a certification by the participating jurisdictions that if the district spreads its levy under the first option listed above, that their property tax levies do not fund expenditures related to services provided by the district. The reports must be submitted on or before March 15, 2024 and again on or before March 15, 2026.