Property tax changes keep changing

Mayors expecting to testify on proposed local government aid reductions and a property tax freeze were caught off-guard when the bill containing the provisions took somewhat of a U-turn.

The House Property and Local Tax Division report in the form of HF481, rolled out on March 12, called for reductions to Local Government Aid that would lead to a phase-out of the program in 2014. It also proposed changes to the market value credit program, disparity reduction aid and payment in lieu in taxes.

But the March 16 morning’s meeting was the start of several hours of testimony on the bill that was substantially altered by an amendment from its sponsor, Rep. Linda Runbeck (R-Circle Pines), the division chairwoman. The bill will most likely be rolled into the omnibus taxes bill (HF42).

Through her successful amendment, the property tax freeze provision was gone; the state’s largest cities would be getting even less LGA than proposed; and some state mandates to counties, known as maintenance of effort requirements, would be suspended for 2012 and 2013, under certain conditions. Also, long-debated changes to the Green Acres and rural preserves legislation were now included; the reduction proposed to the renter’s refund program was increased; and the homeowner property tax refund program would be restructured with fewer taxpayers being eligible.

“These are pretty significant changes to the previous (bill),” said Rep. Paul Marquart (DFL-Dilworth), who asked for more time to consider the changes so that amendments could be presented when the division reconvened.

St. Paul Mayor Chris Coleman said the bill “guts” the strong vitality of the state’s largest cities and “puts before us untenable choices.”

He said he has prioritized public safety, and due to federal funds they have put more officers on the street. “I’m not here to prognosticate what the cuts will look like,” he said.

Under the new provisions in Runbeck’s bill: suburbs would retain their 2011 aid, but would see a 75 percent decrease in 2012; Minneapolis, St. Paul and Duluth would see in 2011 75 percent of the 2010 aid, and 50 percent of the 2010 aid in 2012; and Greater Minnesota would see no change to their aid formula.

Rep. Joe McDonald (R-Delano), a former mayor, said LGA is supposed to supplement and help fundamental services such as public works, fire and police. “If first class cities can’t generate enough income to supplement just public safety, fire, police and public works then we have a problem.”