ST. PAUL, Minn. (AP) — Minnesota House Republicans said Monday they'd push for property tax relief for home and business owners in the next legislative session, amid continuing fallout from the elimination of a popular property tax credit earlier this year.
Rep. Greg Davids, R-Preston, said at a Capitol news conference that he'd push to dedicate about $80 million to lowering property taxes. Davids said that comes in response to frequent complaints he 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.
Dayton and Republican lawmakers eliminated the credit as part of their agreement to close a $5 billion budget shortfall. The move to save the state about $600 million was little noticed at the time but erupted afterward 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.
Davids, the chairman of the House Taxes Committee, said Monday that he didn't foresee bringing back the credit, particularly with another budget shortfall on the horizon he expects will exceed $500 million. But Davids said carving out some state money to send back to commercial and residential property taxpayers would benefit an ailing state economy that can be blamed in large measure for the perpetual shortfalls.
"I happen to believe that what gets us out of our economic woes is private sector job growth," Davids said. He said Republicans would set aside the needed $80 million with cuts to other state programs.
Bloomington state Rep. Ann Lenczewski, the senior Democrat on the Taxes Committee, said Davids' proposal would do little to undo the sting of losing the homestead credit for most property owners.
"Frankly, it looks to me like they want to put themselves behind the idea of property tax relief to distract from taking away the homestead credit," said Lenczewski, who plans to introduce legislation next session to restore the credit. "But it sounds like a pretty pale replacement for what we lost."
Many local government officials also bemoaned the loss of the credit. Alan Oberloh, the mayor of Worthington and president of the Coalition of Greater Minnesota Cities, said the group appreciated Davids' efforts but that it would be cold comfort. "The Legislature cut over $600 million in property tax relief in the summer and today offered to fix it with $80 million," Oberloh said.
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.
Davids' proposal sets the table for what's certain to be another contentious debate between Dayton and lawmakers over tax reform and spending cuts when the Legislature reconvenes in St. Paul in late January. Dayton has called many times for income-tax increases on upper-income Minnesotans to address perpetual state budget shortfalls, but Davids again Monday said that idea would garner no Republican support at all.
Davids said it was too early to say what spending Republicans would seek to cut to pay for property tax relief, but said "everything is on the table" — except Dayton's desire for income tax increases.
Copyright 2011 The Associated Press.