State Rep. Jim Davnie On the Issues – Property Taxes

Property taxes continue to be a pressing challenge for many families in our state. This year, the Minnesota Legislature considered several measures to deliver real and lasting relief to Minnesota property owners. In particular, House policymakers focused their efforts on those for whom property taxes have become most burdensome—widows, senior citizens, and low-income families. The final Omnibus Tax Bill takes several important steps to curtail property tax growth and deliver additional relief to Minnesota homeowners.

This year the House proposed a plan to ensure our property tax refund system effectively targets relief to individuals whose property taxes are large relative to their income. The legislation would have reprioritized several of the current property tax relief programs (i.e. the state income tax deduction for property taxes, the homestead market value credit, and the existing property tax refund), and offered a more substantial, need-based, homestead credit state refund. This refund would have been distributed on a percentage basis determined by income to persons whose property taxes exceeded 2 percent of their income.

Over the past few weeks, Minnesota legislative leaders held extensive negotiations with the Governor over education, health care, budget reconciliation, and taxes. As a result of these negotiations, the House, Senate, and the Governor arrived at a compromise Omnibus Tax Bill. While the final legislation does not include the full-scale House property tax relief plan, the bill delivers significant relief to Minnesota homeowners and important resources to our cities and counties.

This year’s Omnibus Tax Bill injects an additional $23 million into individual property tax relief for Minnesota homeowners. Additionally, the legislation appropriates an additional $22 million for county program aid and $42 million for local government aid (LGA), including a 2% inflationary increase in fiscal year 2011 and a 4% inflationary increase in fiscal year 2012. This money will bolster budgets in local communities, helping them deliver services without relying on further property tax increases. Finally, the Omnibus Tax Bill takes a balanced approach to levy limits, limiting levies to 3.9 percent growth, but including several exceptions so communities can pay for immediate unmet budgetary needs (e.g. police and fire safety, foreclosure costs, etc.).