House Property and Local Tax Division makes its recommendations

“Hurting” is a word that members of the House Property and Local Tax Division have heard a lot this session. Be it local or county governments, homeowners, renters or school districts, testifiers frequently said that they need help making ends meet, proposing various solutions to improve their revenue streams.

On Friday, the division unveiled the report it will present to the House Taxes Committee, and it basically said that help is on its way if the measures recommended are adopted. Rep. Diane Loeffler (DFL-Mpls) is the sponsor of HF2348, as amended.

The biggest boosts would come in the form of property tax aids, credits and refunds, which would increase by $147.4 million for the 2020-21 biennium. And 24 cities would be cleared to institute new sales or lodging taxes for projects ranging from roads to parks to community centers.

For homeowners and renters

An increase and expansion of the Homestead Credit State Refund is projected by the Department of Revenue to result in $22.5 million more in refunds to taxpayers. For homeowners, that means the maximum credit on the homestead credit refund would be increased by $200 for all recipients with household income less than $103,229. Eligibility would also be expanded to those with incomes of up to $155,439.

Renters would also benefit from the bill. An expansion of eligibility and reduction in co-pay percentages for the Renter’s Property Tax Refund is projected to result in $21.6 million being returned to taxpayers. Eligibility would expand to those making up to $74,999, an increase of over $12,000. You’d also get a certificate of rent paid created through a Department of Revenue automated system.

For local and county governments and school districts

There’s been a lot of talk about LGA (Local Government Aid) this session, but representatives from counties were quick to point out that CPA (County Program Aid) also needed help. Each of those funds would see an increase of $29.3 million in Fiscal Year 2021, that total remaining constant for 2022 and 2023.

A modification in the School Building Bond Ag Credit from 40 percent to 70 percent would result in $30.1 million in credits for school districts with significant farmland in Fiscal Year 2021, with substantial increases in ensuing years.

Extending the sunset provision on aid paid to local governments for their employer contributions to the Public Employees Retirement Association would result in $13.2 million more for local governments.

There’s also bonus LGA for five cities that came before the division explaining special circumstances. Among them are West St. Paul (which would receive $920,000 per year for five years), Lilydale (a one-time addition of $275,000) and Hermantown ($200,000 per year for five years).

Did your referendum receive approval?

The division approved plans for 24 cities to institute or modify local sales or lodging taxes, in some cases altering the size and length of what had been approved by voters. The city that stands to gain the most from approval of its referendum is Duluth, which received clearance to raise $40 million over five years for road and bridge improvements.

Other cities with significant sales tax revenue generation plans approved would be Virginia ($30 million for up to 20 years for a recreation complex and convention center) and Elk River ($27 million over 18 years for parks, recreation and lake dredging).

Also having all or part of their referendums approved would be Two Harbors, Worthington, Cambridge, Excelsior, Willmar, Detroit Lakes, Cloquet, Perham, International Falls, Sauk Centre, Blue Earth, Glenwood, Avon, Scanlon, La Crescent, North Mankato, Plymouth and Lake County.

And both Minneapolis and St. Paul would receive approval to raise lodging taxes.

TIF and public finance

Seven municipalities would be provided authority to institute tax increment financing for development projects: Bloomington, Edina, Champlin, Minneapolis, Roseville, Duluth and Burnsville.

Among the changes in laws relating to municipal financing and bonding authority would be expanding the bonding authority for the Minnesota State Fair from $20 million to $30 million. All 87 Minnesota counties would have the authority to institute their own transportation sales taxes, and municipalities would be allowed to file for bankruptcy.

The division is scheduled to consider amendments to the bill at a 9 a.m. meeting on Monday.

What’s in the bill?

The following are selected bills that have been incorporated in part or in whole into the division report:

Property tax refund changes

• HF121 (Hertaus)
• HF398 (Poppe)
• HF458 (Bernardy)
• HF552 (Schultz)
• HF2286 (Loeffler)
• HF2348 (Loeffler)
• HF2349 (Loeffler)
• HF2620 (Drazkowski)

Property tax changes

• HF567 (Loeffler)
• HF632 (Loeffler)
• HF1259 (Sandstede)
• HF2646 (T. Xiong)

Local aid changes

• HF324 (Lislegard)
• HF416 (Poppe)
• HF461 (Hansen)
• HF904 (Kresha)
• HF949 (Hansen)
• HF969 (Murphy)
• HF1104 (Lien)
• HF1163 (Marquart)
• HF1213 (Marquart)
• HF1391 (Marquart)
• HF1434 (Vang)
• HF1458 (Sandstede)
• HF1599 (Sandstede)
• HF2387 (Murphy)

Local sales and lodging taxes

• HF144 (Ecklund)
• HF183 (Schultz)
• HF355 (Demuth)
• HF364 (Sundin)
• HF388 (Nornes)
• HF392 (Anderson)
• HF574 (Loeffler)
• HF667 (Lislegard)
• HF867 (Zerwas)
• HF877 (Klevorn)
• HF933 (Davids)
• HF1130 (Morrison)
• HF1217 (Brand)
• HF1218 (Lesch)
• HF1271 (Marquart)
• HF1318 (Murphy)
• HF1427 (Baker)
• HF1436 (Murphy)
• HF1456 (Sundin)
• HF1483 (Nelson)
• HF1485 (Hamilton)
• HF1498 (Anderson)
• HF1766 (Gunther)
• HF2612 (Loeffler)

Tax increment financing property tax changes

• HF164 (Olson)
• HF176 (Stephenson)
• HF220 (A. Carlson)
• HF655 (Cantrell)
• HF671 (Lee)
• HF1193 (Elkins)
• HF1550 (Becker-Finn)

Public finance

• HF1468 (Davids)
• HF2650 (Marquart)