GOP puts uptick in property taxes for farmers on Dems’ shoulders
MARSHALL – Let the fingerpointing and blame games begin.
Just three days after the House and Senate wrapped up their business at the Capitol for 2014 and a day before Gov. Mark Dayton put his signature on a number of key bills, a pair of local Republicans are calling out Democrats, blaming them for what they called “dramatic property tax increases” for farmers.
District 16 Sen. Gary Dahms and District 16B Rep. Paul Torkelson are co-chairmen of the Minnesota Legislature’s GOP Rural Caucus and are the authors of the commentary blaming Democrats for the hike in property tax increases for farmers. They said for the DFL to turn around and offer tax relief this year after approving property tax increases on farmers a year ago is hypocritical and won’t help make up the difference.
That relief – a total of $16.9 million through the Agriculture Homestead Credit – is set to be mailed to farmers this fall.
“I don’t know where they get the hypocritical part from,” said District 17 Sen. Lyle Koenen, DFL-Clara City. “With farm property taxes, the big issue is the rise of land values, and the property tax system is based on that value. That’s why it’s happening.”
Republicans are calling the credit a “financial bone to farmers in order to keep them from complaining” and are likening the refunds to “Jesse Checks,” saying they’re modeled after the one-time refunds issued by former Gov. Jesse Ventura. But Koenen said comparing the refunds to “Jessie Checks” is disingenuous since those were one-time refunds and the ones that will be issued in October are ongoing.
“Comparing it to ‘Jessie Checks’ is not an accurate statement because it’s an ongoing credit,” said Koenen. “Maybe the timing on it looks a little suspicious but for farmers I find it hard to believe they’re going to base their vote on this.”
Koenen said the Ag Homestead Credit was a proactive step by the Legislature to impending rising property taxes. He said it’s one category that has gone up faster than others because of rapidly-rising farmland values; he said it’s more noticeable because commodity prices have reverted to more normal levels and because profit margins are much tighter now than in the past.
Republicans are also questioning the timing of the mailing of the refunds, just weeks in advance of Election Night.
“I think it’s interesting that they are going to do a refund to farmers in October; doesn’t that seem a little strange, to send it out in October when there’s an election in November,” Dahms said. “We ought to be doing something to seriously reduce taxes. I’ve heard the average check that will be sent out is $200 – to send $200 to agricultural land ownersI just think there’s a better way to do this.”
The commentary also called out Democrats and Dayton for agreeing to impose new sales taxes on farm repairs in the spring of 2013. At Farmfest last summer, they said, Dayton promised to remove the tax during an upcoming special session. The special session ended with no relief.
But Koenen said the sales tax on farm repairs was an error in the bill and was discovered too late. He said the reason it wasn’t addressed in a special session was because Dayton wanted to narrow the scope of the session, while Republicans wanted to bring in each of the business-to-business taxes and repeal them all.
“To do that we would’ve had to rework the budget,” Koenen said. “That’s the reason we were just talking about farm equipment; Governor Dayton got frustrated with it. The Republicans were pretty insistent that we address all business-to-businesses taxes. If they would’ve agreed to address just the farm tax, it would’ve happened.”
Republicans also say Democrats refused to issue refunds of the estimated $10.5 million that was collected from farmers up to that date on the farm repair sales tax that was rescinded on April 1. Koenen said he would’ve liked to see the refund happen, “but it’s important to remember there is some cost to that. If that would’ve happened others could’ve argued for refunds and it would’ve started to balloon out of control.”
The commentary cited non-partisan Minnesota House research on agriculture property tax statistics to show how much property taxes could go up. Research provided says the average farmer in Le Sueur County who owned 250 acres paid $3,948 in property taxes in 2012 and that the same farmer will pay $5,827 this year – a 47.6 percent increase in two years. Also, the average farmer in Martin County who owned 450 acres in 2012 paid $6,623 in property taxes; in 2014, he’ll pay $8,494. In Stevens County, a farmer who paid $7,002 in property taxes for his 570 acres two years ago will now pay $8,580.
Dahms said Republicans were criticized years ago when they were in the majority for balancing the budget without a tax increase and fears the state could slip back into a deficit situation if a better balance between taxing and spending isn’t achieved.
“I think we’re going to see a lesson in economics in tax-and-spend with these last two sessions,” he said. “We’re already seeing the economy turning down. We are $98 million under what we had projected for the budget, and if that continues very long we could easily go back into a deficit situation.”