Minnesota House Tax Committee Chairman Davids proposes property tax relief package

by T.W. Budig
ECM Capitol Reporter
House Tax Committee Chairman Greg Davids, R-Preston on Monday, Nov. 14 proposed an $80 million property tax relief package, offering property tax savings to businesses and some homeowners.
Davids, who expects the state’s November economic forecast to show up to a $750 million state budget shortfall, said at this time he could not say how his tax relief proposal would be paid for.

House Tax Committee Chairman Greg Davids, R-Preston, presented a property tax relief proposal today (Nov. 14) at the State Capitol. (Photo by T.W. Budig)

“We’ll be looking everywhere,” said Davids, calling it a House Republican Caucus priority.
Davids rejected the idea his proposal was an acknowledgement the repeal of the market value homestead credit — a Republican initiative — would result in higher property taxes. “Absolutely not,” Davids said.
“You will see property tax decreases across this state for a lot of homeowners.”
But Davids indicated property taxes could increase, place to place.
In his relief package, Davids is proposing an 18 percent cut in the statewide property taxes for commercial/industrial properties in Greater Minnesota and a four percent cut for metro area commercial/industrial properties.
According to Davids, the business property tax relief would translate into about $411 in tax savings per commerical/industrial parcel.
Additionally, Davids wants to freeze the statewide business property tax levy.
He also wants to slate property tax relief to homeowners whose local property taxes increased by 12 percent or more in tax year 2012. For these taxpayers the percent of the property tax the state refunds would increase from the current 60 percent to 90 percent under his proposal.
Davids also proposes to increase the maximum refund for already eligible homeowners by 20 percent.
DFL View
Rep. Ann Lenczewski, DFL-Bloomington, and other Democrats were critical of Davids’ proposal.
“I think they’re trying to change the subject,” said Lenczewski, former House Tax Committee chairwoman. Republicans want to shift the focus from the homestead credit repeal to business taxes, she said.
Lenczewski finds Republican justifications for repealing the homestead credit flawed.
First, city officials from perhaps 20 of the wealthier Minnesota cities favored getting rid of the credit — it didn’t mean that much to them, she explained. And it’s something of a headache, she said.
But Lenczewski greatly doubts any Greater Minnesota mayor supported the homestead repeal.
Beyond this, the city association lobbyists who came to the State Capitol to urge a repeal represented elected officials — they didn’t represent the voters, Lenczewski said.
The homestead credit has existed under various names for 40 years, and for 30 of the 40 was fully funded, she said.
On a bipartisan basis, it was “shaved” in recent years by lawmakers, said Lenczewski, but the state funding cuts were slight.
The homestead credit repeal translates into $261 million in lost property relief in 2012, and a total of $538 million over the next two years, said Rep. Paul Marquart DFL-Dillworth, minority lead on the House Property and Local Sales Tax Committee.
Davids’ proposal will not mitigate the “sticker shock” awaiting taxpayers when they open their 2012 property tax statement this month, Marquart said in a statement.
While Democratic Gov. Mark Dayton specifically mentioned the homestead credit repeal as objectionable in his message when he vetoed the Republican tax bill earlier this year, the governor accepted it as part of the state government shutdown solution.
Davids defended the homestead credit repeal, calling it “obscene” that lawmakers failed to properly fund the credit after placing the law on the books.