Minn. farm families could get property tax relief

Farm Forum

MINNEAPOLIS (AP) — Most Minnesota farm families would get an extra $260 in property tax relief per year under legislation that’s meant to ease the squeeze they’re feeling between rising property taxes and falling crop prices.

The proposal would tap the state’s budget surplus for $18 million to help more than 90,000 homesteaded farms. It’s part of a larger property tax bill the Minnesota House passed on April 4.

Farmland values have shot up in recent years across Minnesota and other states in response to high prices for corn and other crops. Because property taxes are based on the value of the land, they’ve shot up too. But lower corn prices in 2013 caused a 78 percent drop in Minnesota farm income last year, according to a recent report from the Minnesota State Colleges and Universities system and University of Minnesota Extension. The report also predicted another down year for crop farmers in 2014.

While farm income has fallen, farmland valuations haven’t so far, said Rep. Jim Davnie, DFL-Minneapolis, chairman of the House property tax division and author of the bill.

“It’s a welcome relief,” said Thom Peterson, director of governmental relations for the Minnesota Farmers Union. Given that income is expected to fall while costs such as land rents and fertilizer remain high, he said, any break is helpful.

Most Minnesota farmers would get the first installment in a $230 check in October. Davnie said that’s similar to property tax refund checks that renters and homeowners already get. In future years $260 in new relief would be built into property tax bills, added to an existing $230 agricultural homestead credit for a total of $490 in relief. Some smaller operations wouldn’t get as much of a break.

The proposal came from Rep. Paul Marquart, DFL-Dilworth, who said farmers missed out last year when lawmakers lowered property taxes for rural Minnesota homeowners and businesses. Farmers’ property tax rates went up statewide by about 11 percent, he said, mainly because their property values went up 25 percent.

“There is a very legitimate need for this property tax relief,” Marquart said.

The tax break would be welcome to Tim Velde, who grows corn and soybeans near Granite Falls. His property taxes went up by 37 percent last year alone. Velde said he and his son own about a third of the 2,000 acres they farm in Yellow Medicine County of western Minnesota. Property taxes get built into the rent they pay for the rest of the land. They pay about $37.40 per acre on what they own, he said, so multiply that by 2,000 acres and it works out to close to $75,000.

Velde said he told Gov. Mark Dayton during a Minnesota Farmers Union lobbying day at the Capitol that his property taxes have nearly quadrupled since 2008 while the valuation on his land rose 277 percent.

“I told him if my taxes had gone up by only 277 percent I would have been happy,” Velde said.

Rep. Paul Torkelson of Hanska, the lead Republican on the property tax panel, said he’s concerned that the state will incur extra costs from mailing out the refund checks but he didn’t plan to seek to delay implementing the relief until next year when it could be done just with software changes.

“It’s nice to see Democrats lower taxes. We’re all for that. Keep it up,” Torkelson said.

It’s not clear if there will be a similar provision in the Senate’s property tax relief bill, which has not been released yet. The Senate tax committee chairman, Sen. Rod Skoe, DFL-Clearbrook, did not immediately return a call seeking comment on April 4. But Davnie said he thinks the proposal or something similar has a “better than even chance of making it to the governor’s desk” as part of the final legislation.