Minnesota has been on the wrong path in recent years – our schools lacking adequate funding and property taxes skyrocketing all across the state. As I walked through our neighborhoods last fall, I kept hearing the same thing over and over again. People want to see the state invest in education and they want lower property taxes. The Minnesota House of Representatives heard this message from all Minnesotans and our K-12 and property tax bills provide strong school funding and property tax cuts.
The House K-12 education bill gives our schools the resources they need to educate our children. Our bill invests $441 million to increase the state's per-pupil funding formula by 3% this year and 3% next year. Fuel, heating, books, health insurance and other costs go up every year and a 3% increase helps our schools avoid budget cuts. The Governor's 2% and 2% plan would force many Minnesota school districts back into the red, including our own.
The House K-12 education bill also provides $133 million in property tax cuts. Property taxpayers in the Anoka Hennepin School District will see a $7 million tax cut and those in the Osseo School District will see a tax cut of more than $3 million. This is significant property tax relief and an important first step toward lower property taxes.
The House has proposed a total of $535 million in permanent property tax cuts. The House property tax relief bill will significantly reduce property taxes for all Minnesotans. Homeowners will see a cut of 3% and small business will see a 1% cut. Since 2002, property taxes have increase $1.7 billion. Under the Governor's budget, they will increase another $500 million, or 7.3% next year. That’s the wrong direction and that is why the House proposes real property tax cuts instead.
To pay for $535 million dollars in property tax cuts, the House plan proposes more fairness in Minnesota's income tax. Currently, Minnesotans in the middle class pay over 12% of their income in state and local taxes, while those with higher incomes pay only 9%. Under the House plan married couples making more than $400,000 and single filers making more than $226,000 after deductions would see a half percent increase in the income they earn in excess of those amounts. Every single penny raised by this income tax will go to pay for property tax cuts.
Property taxes and fees have skyrocketed in recent years. In fact, the total property tax increase in Minnesota since 2003 is $2.2 billion, or a $2,000 tax hike for the average family. Relying so heavily on property taxes is the wrong way to go for Minnesota. The House proposes we move forward toward tax fairness instead of allowing property taxes to continue to skyrocket.
Minnesotans are tired of property tax increases yet they want great schools. The House plan reduces property taxes and adequately funds education. I hope the final agreement reached with the Senate and the Governor will look a lot like the House plan.