Tax on farm equipment repairs dominates chatter at ag gathering
In the flurry of activity that closed out the 2013 legislative session, a sales tax on farm machinery repairs became part of the omnibus tax bill ultimately signed into law. Now that the tax is on the books and farmers are facing levies on the labor costs of having their tractors and milking parlors fixed, it’s no surprise that the 11th-hour development at the Capitol is one of the hot topics at the annual Farmfest expo near Redwood Falls.
Duane Alberts milks 600 cows near Pine Island north of Rochester. He’s got a lot of equipment for growing feed and milking the cows. And that’s a lot of equipment that could potentially need repairs.
“It’s something that farmers notice – livestock farmers especially, crop farmers also. It’s a repair bill. And everyone’s repair bill is already too high,” said Alberts, who is also the vice president of the Minnesota Farm Bureau.
On Tuesday Alberts had the chance to talk to Minnesota Department of Revenue Commissioner Myron Frans, who visited with farmers at various booths along the sprawling Gilfillan Estate that’s home to the large annual event, which traditionally features almost as many politicians as farm implement salesmen.
Alberts, who said he’s already paid the tax for fixing a steam cleaner that malfunctioned, said that dairy farmers have slim profit margins and that many use old equipment that frequently falls into disrepair. And newer tractors have sophisticated electronics that can run up a repair bill if they malfunction.
While the Farm Bureau tends to represent larger farming operations, its counterpart, the Minnesota Farmers Union – which tends to have small farm members and leans DFL – is also hoping that lawmakers make a change to the tax. MFU Vice President Gary Wertish, who grows corn and soybeans on 250 acres in Renville County, said he doesn’t think the tax will affect farmers differently depending on their operations. But he also said the tax isn’t fair.
“It’s going to hit everybody’s operation differently, but everybody seems to be in agreement that we’d like to see that one fixed,” said Wertish, who was an agricultural adviser to Gov. Mark Dayton when he served in the U.S. Senate.
Farmers told Frans about their concerns over the tax, which is projected to raise $28 million in the 2014-15 biennium, as he toured Farm Fest.
Frans said that Dayton would have preferred exempting farm machinery from the tax on equipment repairs. “There is support for looking at it anew in the next session,” he said. “Obviously it’s a fiscal issue. We’ve got a balanced budget, and it depends on the November forecast and the February forecast.
“It’s fixable in the sense that it is a fairly modest number. But it is a number, and every revenue number has to be made up from somewhere else.”
Energy policy decisions, both in Washington, D.C. and in St. Paul, were the subject of a Tuesday panel that included the odd-couple pairing of Democratic U.S. Sen. Al Franken and state Rep. Michael Beard, R-Shakopee. Panelists from the Minnesota Corn Growers Association, the ethanol industry and the Minnesota Department of Agriculture were bullish on the prospects for renewable fuels and advocated the government’s support in fostering new emerging technologies.
Beard, who mostly focused on renewable energy as it pertains to generating electricity, was the black sheep on the panel. He singled out projects in the state that were generating renewable energy at high market costs. And Beard, who has long served on the House Energy Committee, also denied that renewable energy will be able to sustain the power needs of heavy industries in the state. He said the state can pursue renewable energy “because we have reliable base-load power to fall back on.”
“You cannot make plywood with windmills,” he went on. “You cannot make paper with solar panels. You cannot make steel with methane digesters. It takes massive, abundant sources of base-load power. And I disagree… that we are getting away from a hydrocarbon economy.”
Franken, who authored the energy title of the farm bill that passed the Senate this year, was quick to retort that there are health and environmental costs associated with coal-based energy production.
“A lot of people who like coal hope there is no such thing as climate change,” Franken said.
Minnesota Department of Commerce Commissioner Mike Rothman noted that renewable energy standards enacted by state lawmakers in the past are being met by Minnesota utilities. Renewable energy usage will increase, he said.
“Our base load is going to be coming from wind. And we’re going to be moving toward natural gas and retiring those coal plants as we go,” Rothman said.
As for the direction of renewable fuels, Minnesota Department of Agriculture Commissioner Dave Frederickson said he sees a need to push for ethanol that’s made from sources other than corn. Frederickson served in the Legislature in the 1980s when lawmakers passed a mandate for ethanol to be mixed in gasoline. He noted that there are currently 21 ethanol plants in Minnesota.
Now, Frederickson said, the policy priority is to increase the amount of biofuels produced from soybeans, known as biodiesel. Minnesota currently has a law known as B-5 that requires 5 percent biodiesel. Currently pending legislation would put a 10-percent mandate in effect if certain conditions related to technology and economic feasibility are met. Frederickson said lawmakers and farmers will need to make a concerted push at the Capitol to get B-10 into law.
“I think it’s going to take some courage on the part of all of us, farmers also,” he said.
Pressing the flesh
Farmfest is the signature event for statewide candidates to schmooze for the votes of farmers, regardless of whether it’s an election year. For politics junkies, the year before Minnesota’s constitutional officers are on the ballot is particularly compelling, because announced and prospective candidates from the same party hit Farmfest in hopes of establishing their reputations as knowledgeable and sympathetic champions of a constituency that both parties covet. On Tuesday, former Rep. Jeremy Kalin paid a visit to Farmfest as a candidate for the open secretary of state job that’s shaping up to be the main event at next year’s DFL endorsing convention in Duluth.
Meanwhile, Republicans vying for the nomination to run against Dayton next year are making the rounds. Hennepin County Commissioner Jeff Johnson made an appearance on Wednesday.
Current and former legislators from southwest Minnesota who attended Farmfest on Tuesday said the gathering is the main event for vetting candidates on agriculture issues. Rep. Chris Swedzinski, R-Ghent, whose district includes the Farmfest grounds, said rural areas have lost population and legislative districts, making the event all the more important as a means to showcase how the agricultural economy functions.
“We’re seeing our population shift in the state.… It’s all the more important to talk about what matters in rural America,” Swedzinski said. “During this last recession that we’ve had and that we’re still working out way out of, agriculture carried this part of the state through.”
DFLer and former House Majority Leader Ted Winter, who grows corn and soybeans near Fulda, was also on hand Tuesday. He said it’s also a place where farmers can come to consensus on a legislative agenda.
“This is a place where people come together who are interested in how you impact farm legislation,” he said. “People can get together and talk and come to some resolve about how they’re going to fix [problems]. And you get federal congressmen and senators who come here and you can shake their hands and talk about what is important.”