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Editorial: Let’s provide state property tax relief for business too

A stronger state economy and lower spending brought an announcement Thursday of a growing Minnesota budget surplus estimate of $1.9 billion.

The surplus is more than double what state leaders expected. By state law, about $655 million will be allocated to the budget reserve and required state payments.

This leaves about $1.2 billion for state politicians to start debating how to spend during the 2016 legislative session, which begins in March.

The majority of the surplus came from $682 million in additional resources, coming primarily from higher-than-expected tax collections, and $249 million in less spending than previously budgeted, according to a Forum News Service report.

The suggested priorities for spending the surplus are many:

  • Roads and bridges
  • Property tax reductions
  • Early childhood programs
  • Education
  • Statewide broadband program
  • Minnesota Sex Offender program
  • Bigger state bonding program

And that is just the beginning of the list.

Gov. Mark Dayton suggested the surplus should be focused on transportation funding, early childhood education spending and a broadband infrastructure program.

Senate Republican Minority Leader David Hann called for an immediate funding of the GOP’s proposed road and bridge program and then returning the rest to Minnesota taxpayers.

House Republican Majority Leader Kurt Daudt said his caucus is looking at targeted tax relief mixed with money for roads and bridges, but he doubts individual refund checks will happen.

Gov. Dayton said it best about the surplus, “The credit belongs to the people of Minnesota ... and the businesses who have decided to locate or expand here.”

That is why a meaningful, long-term reduction in the statewide business property tax should receive strong consideration by the governor and the legislative leaders when distributing the state surplus.

Now is a perfect time to invest in Minnesota’s business competitiveness by reducing the statewide business property tax impact. In rural Minnesota, commercial property taxes are the second highest in the nation. In metro Minnesota, commercial property taxes rank sixth highest in the nation.

In Minnesota, only businesses and cabins are required to pay a state property tax in addition to their local property taxes. This state property tax averages about 30 percent of a business’ total property tax in a year.

In addition, under current law, the business property tax automatically increases every year.

The final point is that the fixed cost of Minnesota’s business property tax is more than 200 percent above neighboring states and more than 90 percent above the national average of some businesses. Thus, a Willmar business seeking jobs or sales in North or South Dakota starts out at a significant cost disadvantage before they even get an order.

Minnesota Main Street businesses and their growth have played a major role in building the current budget surplus. The state property tax program has been an increasing cost burden every year since 2002.

It is only right that some tax relief be delivered to Main Street businesses across this state, an investment which will help keep small businesses growing and staying in Minnesota.