Property tax decreases a step in right direction, lawmakers say

MARSHALL – This week the Minnesota Department of Revenue announced the state’s first overall decrease in property taxes in more than 10 years. While that decrease of $8 million may be small compared to the billions of dollars property owners are expected to pay in 2014, state legislators said it was nevertheless a positive sign.

“This is really good news for Minnesota, and for Minnesota homeowners,” said Minnesota House Speaker Paul Thissen, DFL-Minneapolis.

Thissen spoke to reporters in a conference call Friday, along with Rep. Jim Davnie, DFL-Minneapolis, the chairman of the House Property Tax Division, and Rep. Paul Marquart, DFL-Dilworth, chairman of the House Education Committee. The three legislators discussed the reports released this week by the Department of Revenue and the nonpartisan House Research Department.

The reports found that while individual local levies were a mixed bag of increases and decreases, an increase in the amount of property tax credits and refunds available to property owners means they will pay a total of $8 million less in taxes this year.

Davnie said the impact of the property tax changes would be most helpful for homeowners and small businesses. The legislators said an additional 150,000 homeowners across Minnesota will receive property tax refunds in 2014. In Lyon County, about 800 homeowners would receive increased property tax refunds, they said.

Marquart added that the increase in tax credits and refunds would also have a significant impact throughout greater Minnesota. Rural areas in particular saw their property taxes rise after the Homestead Market Value Credit was eliminated in 2011, he said.

Even before increased tax credits tax credits come into play, Marquart said, property tax levies in rural Minnesota have decreased a total of $30 million.

Marquart said there are still some areas of concern for property taxes, however. Agricultural land values are continuing to rise, and with them property taxes on ag land.

“That is one side we really need to address,” Marquart said.

Increasing agricultural land values were one factor that helped lead to some significant program aid cuts for 11 Minnesota counties, Davnie said. He said moving forward, legislators will be examining the state’s Local Government Aid formulas to help make those aid payments less susceptible to fluctuation.

District 16A Rep. Chris Swedzinski, R-Ghent, agreed Friday that any kind of lower taxes was a positive thing for Minnesotans. However, he said the announced property tax decrease still leaves plenty of room for improvement.

“We’ve gotten such huge increases in property taxes and property values for farmland especially,” Swedzinski said. Overall tax levies were also up for 2014, he said. Compared to an $8.015 billion statewide total for 2014 levies, the $8 million reduction was “a small drop in the bucket.”

“But, whatever we can do to give back is a step in the right direction,” Swedzinski said.

Taxes will still play a big role in the current legislative session, Swedzinski said. On Thursday, members of the House voted to pass a package of more than $500 million in tax cuts. Lawmakers will also be reconsidering a trio of controversial business-to-business sales taxes, including a warehousing tax.