ST. PAUL, MINN. - Wildly popular 2016 Minnesota tax legislation would have cut farmland property taxes, increased state aid to local governments, handed tax breaks to a spouse of a disabled military veteran, reduced state property taxes and made dozens of other tax-related changes.
But even with nearly 90 percent of legislators backing the measure, it never became law. Gov. Mark Dayton did not sign it because his administration discovered a costly wording mistake, and a special legislative session that could have passed the bill never materialized.
So when the 2017 Legislature convenes Tuesday, Jan. 3, the old bill will be used as a framework for a new one.
"All I did is talk about HF848 (the 2016 tax bill) being the best tax bill written in the history of mankind," said veteran House Taxes Chairman Greg Davids, R-Preston.
The 2017 tax bill he will craft, he said, will take its cues from the one left behind. But the House likely will nix some provisions, like a working families tax credit, he said.
ADVERTISEMENT
Democrat Dayton told Forum News Service that he will send legislators his tax proposals during the first week of the session, even before he releases his budget plan on Jan. 24.
While he plans to stick closely to the 2016 tax bill and target farmers and the middle-class for tax cuts, he said that he is concerned Republicans may want to cut too much.
Dayton said that once a tax cut is enacted, it reduces state revenues for years. "The tax bill is precarious."
The governor said he does not plan any major tax increase proposals, but some taxes may go up a little as lawmakers match state law with federal rules to make filing income taxes easier for Minnesotans.
His promise for no major tax increase, however, does not apply to transportation funding, which he said needs an influx of new money.
The most-discussed part of the tax bill is a provision to reduce how much farmland owners pay to build new school facilities. Many rural districts have not been able to build because farmers voted against them.
Unlike in cities, where businesses pay much of the property tax bill, farmers often come up with most of the money in rural areas. In a time like now, when property taxes are rising and farm commodity prices are falling, farmers say they cannot afford the taxes.
"The property tax is the most unfair tax because you have to pay it whether you make a profit or not," Dayton said.
ADVERTISEMENT
Rep. Ben Lien, D-Moorhead, and Sen. Kent Eken, D-Twin Valley, are among lawmakers calling for a study to find new ways to collect taxes from farmers. They said that instead of just taxing based on farmland value, perhaps production or income should be used.
Rep. Dean Urdahl, R-Grove City, said he will continue to push his provision to cut taxes for teachers with a degree in the subject area they teach. Now, many teachers have classes in areas where they are not experts.
The 2016 tax bill would have increased city Local Government Aid from $519 million over two years to $539 million. Counties would receive $10 million more. Aid supporters say such payments cut property taxes cities and counties collect.
Lien said his community and others near the North Dakota and South Dakota borders need the $3 million tax break in the 2016 bill that allows businesses to better compete with lower-tax neighbors to the west.
Sen. Scott Newman, R-Hutchinson, speaks for many Republicans who think taxes are far too high.
"I often think that if you and I were to add up all the taxes we pay at a local level, plus all of the fees we’re required to pay, I would guess we’re paying 50 percent of our income to our government," Newman said. "I don’t think we should have to work for the government, I think the government should work for the people."
Reporter Maureen McMullen and the St. Paul Pioneer Press, a Forum News Service media partner, contributed to this story.
