MSBA chief provides insight on property taxes at forum

MSBA chief provides insight on property taxes at forum

MSBA Executive Director Kirk Schneidawind was featured on a panel during the Rural Legislative Forum held Thursday, December 8, at South Central College in North Mankato.

“Rapidly Rising Property Taxes — Challenging Rural Minnesota” was the theme of this year’s forum.

The forum was moderated by MinnStar Bank Vice President Kent Thiesse. Thiesse is also a Lake Crystal Wellcome Memorial School Board member and a former MSBA president.

Most of the comments from forum attendees concerned the unfair tax burden placed on agriculture landowners whenever a school bond/capital referendum is passed.

Though many in attendance approved of the Legislature’s measure to give a 40 percent property tax credit to landowners, many also considered it a “Band-Aid” approach. (The 40 percent tax credit proposal was included in the Omnibus Tax Bill. The Tax Bill was approved by the Legislature during the 2016 session, but the bill was ultimately vetoed by Gov. Mark Dayton).

During the panel discussion, Thiesse asked Schneidawind his thoughts on the agriculture property tax relief bill and other ideas for balancing school facilities with tax fairness for farmers.

“We’ve been working on this issue for three years,” Schneidawind said. “School boards have been having trouble passing referendums in farming areas. The MSBA Delegate Assembly approved a resolution in 2015 in favor of the 40 percent credit.”

Schneidawind added that the overall goal would be to provide equity for all school districts.

“This tax credit may not go far enough, but it is a good start,” he said. “The tax burden is tough for farmers, but they know it is important to build strong communities through strong schools. We support the ag tax credit to provide some equity for school districts and farmers. Potentially, this could help districts pass bond referendums in the future.”

Later, an audience member asked Schneidawind if the ag tax credit could lead to unnecessary spending from school districts.

“No,” Schneidawind said. “Just having this tax credit doesn’t mean an automatic ‘yes’ vote on referendums. Superintendents and school board members still need to ‘sell the need.’ If you can’t sell the need, you can’t pass the thing.”

Schneidawind added that MSBA will also work on enhancing and indexing equalization aid for debt service and operating referendums this legislative session.

Fellow panelist Faribault County Commissioner Tom Warmka said farmers are not against building schools, but that they just want it done fairly.

“In our county, 73 cents from every dollar comes from farmland,” Warmka said. “We support education, but the way it is being funded is unfair.”

Minnesota Department of Revenue Property Tax Research Director Eric Willette delivered the forum’s keynote address, which including an explanation of the property tax basics and recent trends.

One interesting factoid: Minnesota’s property tax system was formed in 1849 — nine years before Minnesota was granted statehood in 1858. (See the Department of Revenue’s “A Brief History of Minnesota Taxes” for more background information.)

Willette said the state’s property tax system continues to get more complicated over time. And as unpopular as they are to taxpayers, the property tax has been a reliable source of revenue for the state (raising $9 billion a year in revenue).

Schneidawind agreed with Willette: “The property tax does provide stability for our school districts. Tax policy changes can get complicated.”

Willette said that Minnesota ranks as the 16th highest in property taxes per capita in the United States and ranks 20th in property taxes as a percent of person income among the other states.

Also, Willette noted that:

  • Increasing farm values make farm districts appear wealthy.
  • Districts with a lot of agriculture land have had less success with capital referendums in last five years.
  • Districts with more than 75 percent agriculture land are less likely to ask voters for capital levies.

Quote of the Day: “We need to give our students a 21st century education, but we have a 19th century tax system.” — Anonymous audience member

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