Odds of property tax relief this session seem to be improving

ST. PAUL -- Property tax relief should pass the 2007 Minnesota Legislature if it ever can. Democrats complained for more than a year about Republican Gov. Tim Pawlenty and his fellow House Republicans making decisions that cut state payments to l...

ST. PAUL -- Property tax relief should pass the 2007 Minnesota Legislature if it ever can.

Democrats complained for more than a year about Republican Gov. Tim Pawlenty and his fellow House Republicans making decisions that cut state payments to local governments. Democrats say that forced cities, counties, schools and other local governments to raise property taxes.

After November's Democratic election victories, the party is in firm charge of both the state House and Senate, leaving it up to Democrats to follow through with promises of lowering property taxes.

They say they are up to the task, and gave much of the responsibility to a pair of first-time committee chairman from northwestern Minnesota.

"I feel like a kid in a candy store." Rep. Paul Marquart said. "You go from being in the minority six years to having the opportunity to help craft the state's property tax relief bill."


Marquart is chairman of a newly created committee that will deal with property and sales tax questions.

"Property tax relief is by far the biggest tax issue we are going to face this session," Marquart said about a session mostly devoted to establishing a two-year, up to $33 billion budget, including how to fund it.

Marquart's Senate counterpart is Rod Skoe of Clearbrook.

"Having gone through a campaign when everybody said property taxes was on their top three priorities, something has to be done," Skoe said.

Just what the "something" is remains to be debated.

Interviews with legislators show many favor increasing state aid to schools and other local governments so they don't have to raise property taxes, which is their major way to get local revenue.

One-time property tax rebates likely will find little support.

"It's got to be permanent," House Majority Leader Tony Sertich, DFL-Chisholm, said of property tax relief.


"We are evaluating our options," Pawlenty said in mid-December, a couple of weeks after appearing to lean toward a rebate.

State law requires Pawlenty to submit a proposal to rebate some of the state's surplus funds, but legislators don't have to act on it.

Other tax issues are bound to be discussed in the session beginning at noon Wednesday. But other than a gasoline tax increase, most legislative leaders don't seem to be counting on one.

"We are not looking at a tax increase of any kind," incoming House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said.

Other House Democrats are more open to raising taxes. Some openly advocate it.

Sertich said the door is "absolutely not" closed to upping taxes, but the decision will come only after many committee hearings.

Before seriously discussing higher taxes, Democratic-Farmer-Laborites, especially, say they want to make sure all taxes owed the state are being paid and that Minnesota companies operating in other counties pay state taxes.

DFL leaders also emphasize the need to make sure there is little waste in state government.


Regardless of what other tax matters pop up, property tax will be a headline issue.

Property tax relief could come in multiple forms, Rep. Al Juhnke said. If the Legislature approves more state funding for schools, that could ease the burden of local school levies, he said.

In addition, increases in state funding for local governments and transportation could mean cities and counties won't have to seek as much local revenue, Juhnke said.

"Those things together equal property tax relief," he said.

Pawlenty has pushed his idea of a law limiting how much local governments can raise property taxes. It has met with a cool reception in many DFL quarters.

Marquart said his committee will be open to all ideas.

"I really don't think the public is all that concerned how it gets done, but they are concerned that there is real significant property tax relief," he said.

However, he does have some ideas:


n Increase Local Government Aid paid to cities.

n Reduce tax levies schools have added to support their programs.

n Give counties more state aid.

n Provide bigger refunds to property tax payers whose property taxes are too high for their income.

Minnesota property taxes have risen to more than when lawmakers and then-Gov. Jesse Ventura cut them in 2001. However, state policymakers cut payments to local governments when they needed to plug a nearly $4.6 billion hole in the state budget two years later.

The main use of the property tax is to support local governments.

"Our local units of government, they are the closest to the people and they know how to spend money the best," former Dilworth Mayor Marquart said.

Forum Communications reporter Scott Wente contributed to this story.

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