MARSHALL - The elimination of a popular property tax credit during the 2011 session and subsequent fervor that surrounded the deficit-cutting move has prompted the chairman of the House Taxes Committee to try to right what taxpayers say is a definite wrong.
In response to frequent complaints he had heard in recent months about the loss of the homestead market value credit, which benefited about 95 percent of the state's homeowners - most to the tune of at least several hundred dollars a year - Rep. Greg Davids, R-Preston, said at a Capitol news conference Monday that he would push to dedicate about $80 million to lowering property taxes.
State Rep. Andrew Falk, D-Murdock, said he wasn't surprised about taxpayers' reaction to the elimination of the homestead market value credit and what happened during the 2011 session.
Democratic Gov. Mark Dayton and Republican lawmakers wiped out the credit as part of their agreement to close the $5 billion budget shortfall. The move to save the state about $600 million was little noticed at the time but blew up later into a dispute between the Democratic governor and Republicans over who had suggested it. Dayton has said he went along with the proposal only to end a state government shutdown but didn't agree with the idea.
"The Republicans cut hundreds of millions from property tax aids and credits that will have an impact across the state, so there's no reason why people shouldn't be outraged," Falk said. "With the elimination of the homestead market value credit they were willing to raise property taxes on about 98 percent of the people in Minnesota instead of on those making more than $1 million."
Davids' proposal seeks to cut the statewide property tax burden by 18 percent for commercial and industrial property owners in greater Minnesota, and by 4 percent in the Twin Cities area. For homeowners, it would target relief to those who see their local property taxes rise by 12 percent or more in 2012.
Those homeowners would see an increase in the percentage of property taxes that the state refunds from the current 60 percent to 90 percent, and would increase the maximum refund available to already eligible homeowners by 20 percent.
"They're trying to put a little bit of money back in but it doesn't make up for what has been taken out in aids and credits," said Falk. "Even with what they're proposing, Minnesotans will still see property taxes go up. They're cutting more than they're willing to put into programs."
The issue, as well as Davids' proposal, will likely result in plenty of debate between Dayton and lawmakers over tax reform and spending cuts when the Legislature reconvenes in January.
Dayton has called many times for income-tax increases on upper-income Minnesotans to address continuing budget shortfalls, but recent history shows that idea would get little if no Republican support.
The Associated Press
contributed to this report.