State DFL leaders released details today on a $250 million property tax relief package for Minnesotans that includes direct property tax relief to rural homeowners and renters and modernizes the local government aid distribution formula. Up to one million Minnesotans will see direct, targeted property tax relief under the proposal.

“The property tax hikes we’ve seen over the past decade have disproportionately hit middle class families in rural Minnesota,” said Rep. Jeanne Poppe, DFL-Austin, in a press release. “The House DFL property tax bill provides our communities with long-overdue relief.”

Last year, the Legislature eliminated the Homestead Credit, causing property taxes to increase by $370 million statewide. Perpetual budget cuts have caused Minnesotans’ property taxes to increase by 86 percent since 2002. The House DFL plan offers direct property tax relief to middle class Minnesotans by providing $157 million in funding for the Homestead Credit Refund.

Under the Homestead Credit Refund:

• More than 300,000 homeowners (75 percent of filers) will see an increase in their property tax refund.

• More than 100,000 additional homeowners will be eligible for the refund.

• The average homeowner will see their refund increase by $212.

• A grand total of 636,000 homeowners will see direct property tax relief.

 

Renters

In addition to providing middle class homeowners with a refund, the DFL proposal includes $15.5 million for the Renter’s Credit, a refund that provides property tax relief to low- and middle-income renters.

The previous legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit and renters saw their property taxes increase by an average of $87. The new proposal enhances the Renter’s Credit by increasing the maximum refund allowed for renters. 66,000 filers will see a bigger refund and a total of 340,000 renters will see property tax relief through the Renter’s Credit.

“We’re on track to end the status quo of cuts and gimmicks that harm rural Minnesota,” Poppe said in the release. “This property tax relief package is going to make a positive impact on the livelihoods of hundreds of thousands of hard-working people. It puts more money in Minnesotans’ pockets so they can buy groceries, gas for their car, and other goods from local businesses.”

 

LGA

The House DFL is also proposing the most significant Local Government Aid (LGA) reform in over a decade, including $60 million for LGA, $28 million for County Program Aid, and an updated distribution formula based on needs.

Under this proposal, the city of Austin would see a $565,010 increase in LGA, according to the release. The aid distribution formula is meant to provide cities with state aid when their essential needs exceed the amount that they can raise in property and local taxes. Many Greater Minnesota communities have faced severe LGA cuts in recent years, forcing them to cut back or eliminate vital city services such as police officers and firefighters.

“Rural Minnesota has been hit hard by painful cuts to local government and county program aid,” Poppe said. “Property taxes for people living in our region have increased eight times more than in the metro area, and Greater Minnesota business taxes have increased three times more. We cannot expect our communities to thrive when faced with these unpredictable increases.”

The House DFL’s property tax relief package updates Minnesota’s LGA formula to make it more stable, easier to understand and more predictable, according to the release. The new formula is need-based, meaning it provides the most aid to communities with the greatest need. Giving cities and towns a more stable source of aid will allow them to better plan financially and sustain or expand local services such as police, fire, and infrastructure improvements.

“When it comes to property taxes, we’re putting the middle class first,” Poppe said in the release. “Our property tax relief package allows our communities to continue providing the kind of quality services rural Minnesotans expect and deserve. By putting more money in the pockets of middle class families, we’ll increase consumer spending and make sure our economy continues moving forward toward long-term shared prosperity.”