Omnibus tax bill devoted largely to property tax relief


On the heels of successful enactment of a $443 million tax relief bill, the House Taxes Committee got its first look Wednesday at round two — HF3170, the omnibus tax bill.

Most of the provisions, however, are familiar — with some minor adjustments, they are those contained in the HF1884, the division report put forward March 18 by the House Property and Local Tax Division.

Amendments and testimony are expected Thursday on the bill that would provide about $45 million in targeted property tax relief, some of which are extensions to tax provisions enacted last session.

The bill is sponsored by Rep. Ann Lenczewski (DFL-Bloomington), the committee chair. But earlier Wednesday, Rep. Rep. Jim Davnie (DFL-Mpls), division chair, laid out their requests to the Taxes Committee. He said the report contains provisions that would continue leadership’s work from last year to cut property taxes.

Bill provisions include:

Aids and credits

  • Some help would be available to those that live on the land. The bill would increase the agricultural homestead market value credit to a maximum of $490 for property valued at $270,000 and over, effective beginning with taxes payable in 2015. This language is contained in HF3086, sponsored by Rep. Paul Marquart (DFL-Dilworth). In previous committee testimony, he noted that the credit only applies to homesteaded land (where the house is situated). “It might not seem huge, but it can certainly make a difference,” he said.
  • The bill would set aside $24.6 million in fiscal year 2015 to pay for an increase to the homestead credit refund for taxes payable in 2014. An increase in the renter property tax refund would also be provided. The proposals are contained in HF3142 sponsored by Rep. Tim Faust (DFL-Hinckley) and HF2929 sponsored by Rep. Rick Hansen (DFL-South St. Paul).
  • joint powers agreements between local units of government were overlooked in last year’s tax bill that provided a sales tax exemption for counties, cities and school boards. The bill would extend that provision to these entities.

Property taxes

  • Micro-brewers and cheesemakers take note: Are structures used in the production of beer, dairy products, wine or biofuels “real property?” It depends on how they are used. The bill would clarify the definition of “real property” so that the exterior shell would be considered real property only if it is used to hold the finished product or to store ingredients or materials used in the finished product. This would be effective beginning in fiscal year 2017 at a $160,000 cost to the General Fund. This provision came from two bills, HF3099 and HF3122, sponsored by Rep. Andrew Falk (DFL-Murdock).
  • The bill would also extend from five years to eight years the time for a surviving spouse of a totally disabled veteran to continue to receive the veteran’s property tax benefit. The language comes from HF2261 sponsored by Rep. John Persell (DFL-Bemidji).

Economic Development

  • Several communities would see their requests granted for tax increment financing changes, and others would be allowed to extend or authorize local sales tax. Communities affected include: Detroit Lakes, St. Paul, Eagan, Shoreview, Duluth, Albert Lea, Baxter and Brainerd.
  • North Dakota’s oil industry has created a booming economy and lowered tax rates that make it difficult for bordering Minnesota cities, such as Moorhead, to attract and keep businesses.

Contained in the bill is HF2975 sponsored Rep. Ben Lien (DFL-Moorhead) that would provide some relief businesses located in these areas. A business credit of $15 million would be available against income tax for workers employed in the zone in fiscal year 2015. The credit would increase to $3 million in fiscal years 2016 and 2017.

  • Some Greater Minnesota communities have trouble attracting and retaining volunteer firefighters and first responders. The bill contains a $1.78 million allocation for the 2016-2017 biennium to a support a pilot project that would provide a $500 tax credit to these volunteers. The provision is found in HF1985, sponsored by Rep. Shannon Savick (DFL-Wells).
  • Two organizations went before the Taxes Committee seeking amnesty from sales taxes they didn’t realize they owed. With the bill, they would see their requests granted, in part. The

Minnesota Agricultural Interpretive Center (Farmamerica) is one of the organizations. Its mission is to help educate schoolchildren about Minnesota’s farming history. Established in 1978, and operating as a nonprofit, it wasn’t aware sales tax should have been collected on event tickets.

Rep. John Petersburg (R-Waseca) was before the committee Wednesday with HF3156 that would provide some help for the nearly $13,000 the organization owes for the 2008-2011 time frame. He told the committee that the error in reporting was only learned after a Department of Revenue audit. The tax bill would provide temporary sales tax amnesty for the audit time period.

The bill also includes Gov. Mark Dayton’s “Unsession” proposals that would clean up outdated language and obsolete tax provisions in statute.