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Minnesota House of Representatives

State Representative Jeanne Poppe

487 State Office BuildingState Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-4193

For more information contact: Sandy Connolly 651-296-8877

Posted: 2006-05-05 00:00:00
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NEWS COLUMN

PERMANENT PROPERTY TAX RELIEF NEEDED

One of the top concerns we have heard about this session at the State Legislature is rising property taxes. Data shows that since 2003, property taxes have increased statewide by $1.5 billion. A large portion of these taxes are going to our schools – in 2002, net school property taxes were under $1 billion; by 2006, they had risen to $1.6 billion.
There is no one reason for these increases, but rather a combination of many. Maybe the most significant cause is the cuts to Local Government Aid (LGA) over the recent years. Since 2003, LGA has been cut by $523 million in the state, $623 million when you factor in inflation.
Established in1971 as part of a larger property tax reform known as the “Minnesota Miracle", LGA is used at the city's discretion to pay for critical services such as police officers, the fire department and the maintenance of city streets and infrastructure. LGA has gone through some reform since it was first enacted, but for over three decades, cities have depended on it as a major source of revenue. When cuts to LGA were passed, cities across the state struggled to meet their expenses with less money; many were forced to delay repairs or reduce the number of city employees. Increases in property taxes were also a necessary tool to generate more revenue for these services.
In addition, since 2003 county aid has been cut by $220 million ($40 million more with inflation), again forcing either elimination of services or the use of alternative funding sources –such as property taxes, to pay for county services.
On top of that, during this time school districts statewide received their first funding-cut ever, followed by years of flat funding. Cities were forced to consider referendums and levy increases to maintain the high quality education their residents had come to expect for their children. Again, property owners were hit with more increases.
Since the beginning of this session, there has been a call for meaningful and permanent property tax relief. This week, a bill was offered that would send a property tax rebate check to every homeowner in the state. The check would be based on property taxes paid, with no maximum cap. Although a check in the mail is always appealing, this plan has significant drawbacks.
To begin with, the rebate check is contingent on cigarette fee money. The State Supreme Court is currently deliberating on the legality of that fee. If the current ruling by the lower court is upheld, the fee will be found to be illegal and the rebate check cannot be funded.
The rebate check plan also heavily favors the metro area over Greater Minnesota. Despite the fact the most significant cuts in LGA were made in rural Minnesota, 68.7% of the property tax rebate money would go to the metro area. For example, the average homeowner in SW Hennepin County will receive a $400 rebate, while the average homeowner in our area will get $114.
I voted for this bill, but would have preferred an alternative plan – one that was offered in an amendment to this bill.
The amendment, offered by Rep. Paul Marquardt (DFL- Dilworth), used the same amount of money as designated for the rebate check, but provided for long-term, permanent property tax relief instead of a one-time check. Marquardt's plan included people who are left out of the tax rebate plan: renters (who pay their share of higher property taxes through their rent), agricultural and commercial-industrial property owners.
The Marquardt amendment would have increased LGA to cities by $40 million a year. This would have meant an additional $150,000 to the city of Austin in 2007.
The amendment would have reduced school property tax levies by $60 million a year, offering a savings of $261 thousand for the Austin School District. Both of these would have the direct effect of lowering property taxes for the long-term in a fair manner.
In addition, the Marquardt amendment was a more even split, giving 53% to the metro area and 47% to Greater Minnesota.
In the end, supporters of the amendment were not given a chance to vote on it –it was ruled as not germane to the bill. The rebate check plan was voted on, and passed. I know that when, and if, those checks arrive, they well be welcomed by each household. However, I do believe that most of us would still prefer permanent and meaningful property tax relief.

Omnibus Tax Bill
I was very pleased to learn on Wednesday our request for a local option sales tax for Austin was included in the first draft of the House Omnibus Tax Bill. However, on Thursday night the Tax Committee killed the tax bill on a bipartisan vote because of serious funding flaws. The tax bill would have offered some restoration of LGA funding, but at the expense of funding for transportation. It also proposed some income tax cuts, but would have cut funding for education and nursing homes and again, prompted more increases in property taxes. It appears as though our request was one of the few reasonable components in the bill.
Rep. Krinkie told me our request for a local option sales tax was the only one that met the criteria set by the committee. The fact that Rep. Krinkie, who generally opposes local option sales tax, sees the merit of our proposal gives me hope that our request will meet with success sometime in the future.
On Wednesday, I sat in on the bonding conference committee and was pleased Rep. Dan Dorman, on behalf of the House Conferees, accepted the Senate's proposed higher amount of $25 million for flood mitigation. This money will be used throughout the state; the city of Austin should receive at least $3 million and as much as $5.2 million.
Please feel free to contact me with your suggestions and feedback. I can be reached by phone at 1-888-682-3180 or 1-651-296-4193, by mail at 231 State Office Building, 100 Martin Luther King Blvd., St. Paul, MN 55155 or via e-mail at the above address. If you are interested in receiving my weekly session e-newsletter, please email me rep.jeanne.poppe@house.mn and your name will be added to our list. If you would like to stay more closely in touch with what is happening at the legislature, visit my website at http://www.house.mn/27B or the House of Representatives website at www.house.mn.

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