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Looking for a revamp

Published (3/20/2009)
By Sonja Hegman
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A program that hasn’t changed since its inception could be studied to determine its effectiveness.

Sponsored by Rep. Ann Lenczewski (DFL-Bloomington), HF479 would provide $50,000 for the commissioner of revenue to conduct a study of the metropolitan fiscal disparities program and report to the House and Senate tax committees by Feb. 1, 2010.

The House Property and Local Sales Tax Division held the bill over March 17 for possible inclusion in its report to the House Taxes Committee. A companion, SF1713, sponsored by Sen. David Hann (R-Eden Prairie), awaits action by the Senate Taxes Committee.

“This hasn’t changed since before some of you were born,” Lenczewski said. “Not a word of it has changed since then and it hasn’t been studied.”

According to the nonpartisan House Research Department, the fiscal disparities program is a system for the partial sharing of commercial-industrial property tax base among all jurisdictions within a geographic area. In Minnesota, two programs are used: the primary one was created in 1971 and operates in the seven-county Twin Cities metropolitan area; a smaller version was created in 1995 for the Iron Range.

The proposed study would be used to consider whether the program is meeting the following goals and what changes could be made:

• reducing the extent to which the property tax system encourages inefficient development patterns;

• ensuring that the benefits of economic growth are shared throughout the region;

• allowing taxing jurisdictions to deliver services in proportion to their tax effort;

• compensating jurisdictions for low-tax-yield properties that provide regional benefits;

• promoting a fair distribution of tax burdens across the region; and

• reducing economic losses from competition for commercial-industrial tax base.

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