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Published July 17, 2014, 11:57 AM

Minn. farmland taxes expected to rise

Many Minnesota property owners could see some tax relief this year, but farmers can expect higher taxes for at least the next two years. “What I am hearing is it is making it much more difficult to do business as a farmer,” Rep. Paul Marquart, D-Dilworth, says of agriculture property tax increases.

By: Don Davis, Minnesota Public Radio News

ST. PAUL — Many Minnesota property owners could see some tax relief this year, but farmers can expect higher taxes for at least the next two years.

“What I am hearing is it is making it much more difficult to do business as a farmer,” Rep. Paul Marquart, D-Dilworth, says of agriculture property tax increases.

Still, he says, the Democratic-controlled Legislature and governor’s office have slowed increases that have occurred for more than a decade.

A new, nonpartisan Minnesota House report shows that property taxes as a whole should fall $49 million this year, a 0.6 percent drop, although the cost for each property owner will be different. The tax cut may not be seen on property tax bills because the House figures in tax refunds that Democrats increased.

In 2015, property taxes should go up $238 million, a 2.8 percent increase, the House report predicted.

In both years, farmland property taxes are expected to rise: 8.1 percent this year and 4.7 percent next year.

Researchers emphasize that they are working off their best guess because they cannot predict factors such as how much local governments may raise property taxes and how much property may be worth.

The two major parties waged a news release battle soon after the property tax figures were released. Democrats emphasized this year’s predicted drop in most types of property taxes, while Republicans focused on the 2015 increases.

“We knew farmers and rural landowners were going to be hit hard with property tax increases, but now it appears that homeowners in all tax brackets can expect to pay more despite promises the Democrats made over the past two years,” says Rep. Paul Torkelson, R-Hanska. “Make no mistake, hardworking Minnesotans from all corners of the state are going to feel the impacts of this property tax increase.”

A news release from Democratic-Farmer-Labor Party lawmakers showed a different side, explaining that when Republicans were in charge, property taxes soared $370 million in 2012.

“The DFL-led Legislature made property tax relief a priority in our budget and, in particular, made direct property tax relief a priority,” the DFL reports, adding that Democrats approved $178 million in property tax relief in the past two years and more than 300,000 homeowners should receive larger property tax refunds.

Marquart, long an outspoken supporter of lowering farm taxes, says at least agriculture taxes are not rising as fast as they would have under the policies in effect when Democrats took over in early 2013.

The rising taxes still bother him: “I don’t like that, but I think we are getting ag property taxes under control.”

Marquart says the main reason farm property taxes are going up is that farmland value is rising. While home values recently have gone up 6.8 percent, ag land is up 13.3 percent, he said. That shifts property taxes from homes to farmland.

Farmers complain that while land prices are rising, they do not benefit unless they sell their farms.

Marquart says farmers in his western Minnesota district report taxes that not long ago were $14 to $15 an acre now are $30 to $40. “It really has impacted the cost of production.”

Marquart says he does not have the answer to how to fix ag taxes, but said the Legislature and governor must tackle the issue next year.

“We still have a lot of work to do, absolutely,” Marquart says. “But we are moving in the right direction.”

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