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Bill aims to end state tax on cabins

By the end of the decade, cabin owners could see their property tax bills drop by about a third.

HF665, sponsored by Rep. Ron Erhardt (DFL-Edina), would phase out the state general levy on seasonal-recreational properties, which dates to the Gov. Jesse Ventura era.

"Seasonal-recreational" includes both commercial and noncommercial properties.

The bill would see the levy — now split 95 percent commercial-industrial/5 percent seasonal-recreational — drop its reliance on seasonal-recreational property tax by one percentage point per year from 2016 until it’s zeroed out in 2020.

On a Tuesday voice vote, the House Greater Minnesota Economic and Workforce Development Policy Committee approved the bill and sent it to the House Taxes Committee. The bill has no Senate companion.

“We’ve been mystified why family cabins and hunting shacks have been subject to a commercial property tax since 2001,” said Jeff Forester, executive director of Minnesota Lakes and Rivers Advocates.

Erhardt said he’s heard several versions of the levy’s origins, but lobbyists who were present have told him it came out of a legislative conference committee looking for extra money to close a budget hole.

Since then, he said, the amount the levy has sent to state coffers has risen from about $400 million to $854 million. His bill would also freeze the state general levy at that amount.

At the same time, according to Erhardt and Forester, the levy has played a role in an ever-increasing number of families selling their cabins and hunting land. Both said the state general levy amounted to about one-third of the total property tax amount they pay on their own vacation properties.

Rep. Debra Kiel (R-Crookston), a former cabin owner, said the property tax burden on on seasonal-recreational property “needs to be reasonable.”

Rep. Mike Sundin (DFL-Esko) said the state general levy freeze had him concerned about a “$150 million hole” from lost tax revenues. “Where is that money going to come from?”

“A printing press in my basement,” Erhardt joked. More seriously, he said, “To pay for that, we’re going to need to find some money,” mentioning the state’s projected budget surplus and its generally expanding economy as two factors that might help make up for the freeze on levy revenue.


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