Property tax relief nearly overshadowed by new ‘sand tax’

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Staying true to their word that property tax relief would be among the session’s top priorities, the DFL majority has laid out a plan that would have more homeowners qualifying for a property tax refund. However, a proposed tax expansion on the state’s budding frac sand mining operations — contained in the same bill — pushed tax relief to the sidelines during testimony.

The property and local tax division report would provide more than $159 million over the 2014-2015 biennium to aid qualifying property owners. Additionally, the bill lays out a one-time initiative to reach out to the 100,000 or so homeowners who may be eligible for the refund, under some of the new less restrictive guidelines. This includes a new definition of household income that would exclude up to $5,000 for contributions to retirement accounts.

Testifiers to the bill on Wednesday during the House Property and Local Tax Division meeting had little to say about the proposed tax relief, but had plenty to say about the so-called “sand tax.” All totaled, new taxes on the state’s silica sand mining operations would bring in to the state’s General Fund approximately $8.9 million in the 2014-2015 biennium. But at what cost, asked businesses operators and union workers involved in the industry.

One operator said the effect of higher taxes would most likely force them to move their operations to one of their other locations out of state. Minnesota’s high quality silica sand needs to remain competitive in price with others on the market, said Michael Wallenius, vice president of operations for Unimin Corporation. “There are more and more folks wanting to enter the market. There really isn’t anyone who can dictate a price at all, and it is competitive.”

What’s in the bill?

The following are selected bills that have been incorporated in part or in whole into the omnibus judiciary finance and policy bill:
HF333-Davnie
HF1608-Lien
HF208– Lenczewski
HF1336-Hansen
HF1246-Anzelc

The proposals are all part of HF2, sponsored by Rep. Jim Davnie (DFL-Mpls), who chairs the division, which approved the report and moved it to the House Taxes Committee for consideration in an omnibus tax bill.

The bill would also provide a new calculation for funding local government aid, which supporters say would add stability that has been lacking in the program. The proposal, coming from HF1608, sponsored by Rep. Ben Lien (DFL-Moorhead), would base a city’s unmet need (the amount needed to bridge the gap between its service costs and its funding) on three measures, which also takes into consideration city’s population and the age of its housing stock.

Other provisions in the bill include:

  • modification to the renter property tax refund and also provide an increase to the maximum amount that a renter can receive from $1,620 to $2,000;
  • property tax exemption for Target Center and the new St. Paul ballpark;
  • several modifications for Mall of America expansion financing;
  • tax-increment financing district adjustments to help 3M construct a new research facility; and
  • authorization for use of local taxes for various projects.