Tax bills have had a slim-to-none chance of escaping Gov. Tim Pawlenty’s veto pen over the years. Void of revenue-raising proposals, this session’s omnibus tax law mostly falls into the slim category. All provisions were OK’d, except for three appropriations for local project appropriations which were vetoed.
Among the provisions in the law, sponsored by Rep. Ann Lenczewski (DFL-Bloomington) and Sen. Tom Bakk (DFL-Cook), are tax breaks to those trying to rebuild from flooding and other natural disasters experienced in the last few years.
Otter Tail County will see $200,000 to compensate for the cost of road and infrastructure repair due to flooding, and the City of St. Charles will see additional state aid for its loss of tax base due to a fire at the city’s largest employer.
Most provisions in the law are effective for assessment year 2010, for taxes payable in 2011.
The new law provides a valuation exclusion for a home where the value has been reduced by at least $15,000 after a natural disaster; has been restored or rebuilt by the end of the year after the disaster; and has an estimated market value after reconstruction that exceeds its pre-disaster value by at least $25,000.
Recent laws relating to land assessments of family farms, especially the 2008 Green Acres law, are controversial. At the very least, opponents seek clarification of some of the provisions.
The new law asks the commissioner of revenue to develop a fair and uniform method of determining the average value of agricultural land in each county to be used for property enrolled in the Green Acres program.
Other provisions include:
• in response to a portion of the tax court’s decision in Sommerdorf v. Sherburne County, the law broadens eligibility for property used for commercial boarding of horses to qualify for agricultural classification; and
• a 13-member property tax working group is established to investigate ways to simplify the property tax system, to reexamine the property tax calendar and to determine the cost-benefit ratio of the various property tax components. Recommendations are due to the Legislature by Feb. 1, 2012.
Local authority extended
One way for local units of government to bring in new revenue is through local food and beverage and/or lodging taxes, and also by asking the Legislature for permission to have their residents decide whether bonds should be let for certain projects.
Local taxing authority approved in the law includes:
• Rochester can issue up to $43.5 million in general obligation bonds to pay for the Mayo Civic Center Complex project;
• Proctor can increase its bonding authority to pay for a street and community center project from $3.6 million to $10 million; and
• Detroit Lakes, Marshall and Biwabik can impose local sales taxes.
The governor vetoed three projects, funded at $100,000 each: development of a carbon-neutral industrial park in Chisago County; preliminary engineering and design for a biomass facility and industrial park improvements for renewable energy development in Princeton; and facility and parking improvements at the Revenue Department’s Ely facility.
In his veto letter, Pawlenty said the appropriations were rejected “because the local projects they fund were never vetted through the committee process where the merits of each could be publicly and properly evaluated.”
Tax Increment Financing regulations are somewhat eased by providing local units of government more ability to use the tool for redevelopment purposes. The law also expands short-term borrowing authority for larger watershed districts and authorizes the Metropolitan Council to issue $34.6 million in bond revenues to fund its transit capital improvement plan.
There are some steps laid out that could lead to tax reform, including a required report of the state tax expenditures. By Feb. 15, 2011, the Revenue Department is to suggest to the Legislature a process for periodic review and a sunset for extension of tax expenditures. The law appropriates $60,000 in fiscal year 2011 to fund the review.
Revenue raiser raises none
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