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Legislative News and Views - Rep. David Bly (DFL)

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Rep. Bly Praises House DFL Property Tax Relief Package

Thursday, April 4, 2013

ST. PAUL, MN – This week, a Minnesota House committee passed the DFL majority’s $250 million property tax relief package. It includes direct property tax relief to homeowners and renters and modernizes the local government aid (LGA) distribution formula. Up to one million Minnesotans will see direct, targeted property tax relief under the proposal.

“This bill puts more money in the pockets of middle class families, allowing them to buy more products and services from local businesses and keep our economy on the road to recovery,” said Rep. Bly. “Cuts to local government aid caused an 86 percent increase in property taxes since 2002. It’s time to provide Minnesotans with some relief.”

Last year, the GOP-controlled Legislature eliminated the Homestead Credit, causing property taxes to increase by $370 million statewide. Perpetual budget cuts have caused Minnesotans’ property taxes to increase by 86 percent since 2002.

The House DFL plan offers direct property tax relief to middle class Minnesotans by providing $157 million in funding for the Homestead Credit Refund. 

Under the Homestead Credit Refund:

  • More than 300,000 homeowners (75% of filers) will see an increase in their property tax refund.
  • More than 100,000 additional homeowners will be eligible for the refund.
  • The average homeowner will see their refund increase by $212.
  • A grand total of 636,000 homeowners will see direct property tax relief.

In addition to providing middle class homeowners with a refund, the DFL proposal includes $15.5 million for the Renter’s Credit, a refund that provides direct property tax relief to low- and middle-income renters.

The previous legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit and renters saw their property taxes increase by an average of $87. The new proposal enhances the Renter’s Credit by increasing the maximum refund allowed for renters. 66,000 filers will see a bigger refund and a total of 340,000 renters will see property tax relief through the Renter’s Credit.

“Middle class families in cities like Northfield, Montgomery, and Lonsdale have been squeezed for far too long,” said Rep. Bly. “The House DFL property tax relief package is going to have a positive impact on hundreds of thousands of Minnesotans’ livelihoods.”

The House DFL is also proposing the most significant LGA reform in over a decade, including $60 million for LGA, $28 million for County Program Aid, and an updated distribution formula based on needs.

Under this proposal, the city of Northfield would see a $417,501 increase in LGA. The aid distribution formula is meant to provide cities with state aid when their essential needs exceed the amount that they can raise in property and local taxes. Many Greater Minnesota communities have faced severe LGA cuts in recent years, forcing them to cut back or eliminate vital city services such as police officers and firefighters.

“Greater Minnesota was hit hard by painful cuts to local government and county program aid over the past ten years,” said Rep. Bly. “Property taxes for residents in our region have increased eight times more than in the metro area. Plus, taxes for businesses have increased three times more. Our communities cannot grow or plan for the future when faced with these unpredictable increases.”

The House DFL’s property tax relief package updates Minnesota’s LGA formula to make it more stable, easier to understand, and more predictable. The new formula is need-based, meaning it provides the most aid to communities with the greatest need. Giving cities and towns a more stable source of aid will allow them to better plan financially and sustain or expand local services such as police, fire, and infrastructure improvements.

“We’re going to make sure our cities and towns have the resources they need to continue providing quality services Minnesotans expect and deserve,” said Rep. Bly. “Thanks to this property tax relief package, our state will remain a place where people will want to live, work, and raise a family.”