Minnesota Lawyer
Rep. Greg Davids
House Taxes Chair Greg Davids unveiled an $80 million property tax relief package Monday, looking to stem growing concern among property owners, local governments and some in his caucus over rising tax bills across the state.
The plan would begin to phase out the statewide business property tax over the next 20 years and boost targeted property tax relief to homeowners who are seeing abnormal increases in their taxes this year. It would also increase the maximum refund available to eligible homeowners by 20 percent.
Davids said the proposal would be paid for with cuts elsewhere that will be specified later. When asked why he’s confident such cuts will be made to fund the tax relief proposal, Davids said the initiative will be a “top priority” for the House GOP.
Still, any such spending is likely to prove difficult this coming session, with the state expected to be facing a renewed budget deficit after the next forecast is unveiled Dec. 1.
“It makes it tougher,” Davids said of a looming deficit. “But like I said, it’s a top-tier priority for our caucus.”
The announcement comes as truth-in-taxation statements have been reaching Minnesota property owners, highlighting growing resentment and blame-shifting between local governments and the Capitol over who’s at fault for increasing tax bills in some areas. The statements spell out exactly how much each person will have to pay in property taxes. In some areas of the state, levies have increased by more than 10 percent, while others have seen more modest increases. Others, too, have remained flat or even decreased.
But a change in the market value homestead tax credit has brought increasing attention to property tax issues and increasing tax bills. The program, which used to provide property owners with a direct credit, was changed last session into a market value tax exclusion program. That allows property owners to deduct some of the value of their home in order to pay less in taxes. But the difference has left some local governments to raise taxes to make up the difference.
DFLers, for their part, have been reprising their session-long arguments from earlier this year that GOP policies would raise property taxes . On Monday, Davids rejected that and the suggestion that his latest proposal is an admission that DFLers were right, pointing out that he backed similar tax relief legislation during the regular session earlier this year.
So far, more than 30 DFLers have joined Reps. Paul Marquart and Ann Lenczewski in an effort to reverse the market value credit change, although they too haven’t specified how it would be paid for. Some Republicans, meanwhile, have said they’ll propose changes to the new program and additional tax relief to offset some of the highest tax increases. Property Tax Division Linda Runbeck has said she’ll back some tax relief but also plans to propose a levy freeze for the most frequent tax-hikers around the state. Davids said such a proposal would get a hearing in his Taxes Committee, but was noncommittal on the idea.
In the Senate, Jobs Committee Chairman Geoff Michel has also said business property taxes and corporate income taxes are two areas ripe for reform – and relief – going into 2012. In the 2011 session, the House and Senate majorities also divided on whether to focus tax relief (property or income) on individuals or businesses. Ultimately, the Senate’s proposal corporate income tax relief and a phase-out of the statewide business property tax were dropped.
Rep. Larry Howes, who says some in his district are seeing 1,000 percent increases become of anomalies in the property tax change, told Capitol Report earlier this month that he’s gain assurance from Republican leaders that they’ll back his proposed changes and tax relief proposals.
While he declined to say how much money leadership has promised to his efforts, Howes did have some tough words at the time.
“I’ve been assured by leadership that they’re going to help,” he told Capitol Report. “There are enough of us that, if that assurance doesn’t follow through, we may have to join Marquart and Lenczewski. I don’t want to, but maybe we’ll have to. We have to do something.”
