Dear friends,
It has been another busy week in St. Paul as we are working to pass omnibus budget bills out of finance committees to meet the April 19 deadline. There is a lot going on, but with my chairing of the Property and Local Tax Division, a big piece of my work has been accomplished by putting together the Omnibus Property Tax bill.
This property tax legislation includes direct property tax relief for homeowners and renters and significantly reforms the local government aid formula. These measures are meant to curb property tax hikes that have been squeezing middle class families statewide. Property taxes have risen a whopping 86% in the last decade and last year the elimination of the Homestead Credit by the GOP-controlled legislature increased property taxes by $370 million. We have been working hard in the Property and Local Tax Division for several months to address this problem for middle class families and small businesses, and the property tax relief package is a product of much of our committee work.
A key component of the bill is the Homestead Credit Refund. This refund will provide direct property tax relief to homeowners. In addition, we have found that many homeowners who have historically qualified for a refund haven’t filed for one. We are going to reach out to middle class homeowners who qualify for a refund to make sure that families are getting the full property tax relief that they are eligible for. Under the new plan, more than 300,000 homeowners will see a refund increase and the average homeowner will see a refund increase of $212. 636,000 Minnesotans will see direct property tax relief through this component of the proposal.
In addition to providing homeowners with a refund, the property tax relief proposal expands the Renter’s Credit. The Renter’s Credit refund provides direct property tax relief to low- and middle-income renters. Expanding the Renter’s Credit will give 66,000 filers a bigger refund and a total of 340,000 renters property tax relief across Minnesota.
Another major component of the property tax relief package includes the most significant local government aid (LGA) reform in over a decade. LGA was implemented in the 1970’s to help communities meet their basic needs when raising local taxes couldn’t pay the bills. LGA aids cities like Minneapolis, St. Paul and other regional centers who see an increased population during the work day but collect taxes from a smaller population of residents and homeowners. In addition, LGA helps smaller communities throughout the state that may have trouble providing essential city services due to low populations and tax bases.
Local government aid has been severely cut in recent years, forcing many Minnesota communities to cut back or eliminate local services. Minneapolis has lost more than 40% of its LGA in the last decade. The new LGA formula included in the property tax relief package is need-based, and provides increased funding to the communities who need it most. The improved formula is stable, easier to understand, and more reliable. Stable funding will help communities budget into the future and may reduce the need for local levies and tax increases year after year. Under the new formula, Minneapolis will receive an $8.9 million increase in LGA payments for 2014. In addition to increased LGA, Hennepin County will receive an additional 18.5% in county program aid. County program aid helps counties to meet their needs.
Property tax reform and relief has been a major focus of this legislative session due to years of property tax increases statewide. It has been my pleasure to chair the Property Tax Committee this session to work to provide comprehensive property tax relief to middle class Minnesotans and to reform our aid formulas so that our cities and counties can thrive for years to come.
I also want to make you aware that this year the Minnesota Department of Revenue is offering free electronic filing for homeowners who qualify for a Property Tax Refund. You can view more information or file your property taxes here:
http://www.revenue.state.mn.us/individuals/prop_tax_refund/Pages/File-and-Pay.aspx.
Next week, the House is expected to release the Omnibus Tax Bill. Many parts of the Governor’s tax proposal have been featured in the media and we have been working to come up with our own funding proposals in the House Tax Committee. The Omnibus Transportation Finance bill has been released and is being debated in committee today. These omnibus bills are all products of months of testimony from community members and policy experts on different areas of the state budget.
On the House floor next week, we will be voting on some of the omnibus bills that have already been released. This will likely include the Jobs, Commerce and Housing, Environment Finance, Judiciary, Public Safety, State Government and Veterans Affairs and Legacy bills. Once these proposals are voted off of the House floor, they will go to conference committee where differences between House and Senate versions of the bills will be worked out. At that point the proposals will return to the House and Senate floor for final passage.
The budget has been the legislature’s top priority this session and these next few weeks will go quickly as we work to pass these omnibus bills. Please feel free to contact me directly with your input on these or any other legislative issues. My office door in St. Paul is always open, or you can reach me by phone at (651) 296-0173 or by email at rep.jim.davnie@house.mn. You can also follow me on Twitter at @jdavnie and follow the Property Tax Committee at @mnproptaxes.
I also encourage you to sign up to receive Session Weekly, a nonpartisan publication of Minnesota House of Representatives Public Information Services. It is no longer available in print but you can sign up to receive the weekly electronic updates here: http://www.house.leg.state.mn.us/hinfo/subscribesw.asp.
Thank you for the honor of serving you at the State House.
Sincerely,
Jim Davnie
State Representative
District 63A