A $103.25 million package of tax proposals aimed largely at providing property tax relief during the current biennium passed off the House floor Friday on a 125-0 vote.
Bipartisan support for the bill was ensured with the adoption of several amendments put forward by Republicans.
HF3167 builds on 2013 property tax relief by providing $45 million in fiscal year 2015, with many provisions continuing on through fiscal years 2016-2017. It is sponsored by Rep. Ann Lenczewski (DFL-Bloomington), chair of the House Taxes Committee. The bill now moves to the Senate where Sen. Rod Skoe (DFL-Clearbrook) is the sponsor.
“For the first time in 12 years, Minnesotans will be paying less in property taxes than they did last year,” said Rep. Jim Davnie (DFL-Mpls), chair of the House Property and Local Tax Division. “This bill further enhances the property tax changes enacted last year.”
As an example, he pointed to the $18 million in relief to farmers “who are getting caught between rising farm land values and falling commodity prices.”
Besides addressing property tax relief, the bill includes various community requests to adjust their tools used to spur economic development — tax-increment financing and local sales and use taxes.
A provision added in the House Ways and Means Committee would allow taxpayers a deduction for 2013 for contributions to Philippine typhoon relief made after March 25, 2014, and before April 15, 2014.
Also, in committee, Gov. Mark Dayton’s “Unsession” request to trim the number of property tax classifications was scrapped. Rep. Greg Davids (R-Preston) successfully argued for an amendment to nix the recommendation saying that small businesses would be hurt by the change, including bed and breakfasts and small family-owned resorts.
Other parts of the bill include:
Aids and credits
- 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. Additionally, each agricultural homestead receiving a market value credit for taxes payable in 2014 would be eligible for a credit of $230, provided this does not exceed the amount of taxes due on the property;
- The homestead credit refund for taxes payable in 2014 would be increased by 3 percent, and the renter property tax refund would also increase;
- Joint powers agreements between jurisdictions would join some other local governments in being exempt from paying sales tax;
- The bill would 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.
- Several communities would see their requests granted for tax-increment financing changes, and others would be allowed to extend or authorize local sales tax: Albert Lea, Baxter, Brainerd, Detroit Lakes, Duluth, Eagan, North St. Paul, St. Paul and Shoreview;
- A business credit of $1.5 million would be available for tax reductions in the Border City program area in fiscal year 2014. The credit would increase to $3 million in fiscal years 2015-2019. The purpose for these credits is to help Minnesota businesses compete with the lowered tax rates being offered in North Dakota;
- The definition of the angel investment credit is expanded to offer more opportunity for investment in Greater Minnesota ventures.
- 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 in Blue Earth, Faribault, Freeborn, Martin, Steele, Waseca and Watonwan counties that would provide a $500 tax credit to these volunteers;
- Two organizations went before the House Taxes Committee seeking amnesty from sales taxes they didn’t realize they owed. With the bill, they would see their requests granted, in part.
Rep. Bob Dettmer (R-Forest Lake), retired from the U.S. Army Reserve, successfully proffered an amendment that would exempt military retirement pay from state taxes effective for taxable years beginning after Dec. 31, 2014. This would be limited to $1,500 for each year or portion of a year of military service. In the case of a married couple filing jointly, each spouse would be eligible for this subtraction.
Other Republican amendments successfully attached to the bill include:
- A credit of up to $500 against principal and interest on qualified education loans for those who are first-generation college attendees – Rep. Ron Kresha (R-Little Falls);
- $3.7 million in property tax relief grants to be made available for female-owned and operated small businesses for fiscal year 2016 – Rep. Joyce Peppin (R-Rogers); and
- reducing the 6 percent renters credit to 5 percent and directing the money to reinstate the dependent care credit for low income families – Rep. Jenifer Loon (R-Eden Praire).