MN Senate panel OKs property tax relief bill

03/30/2007

The committee plan for property tax relief for homeowners involves tax increases for businesses and seeks to kill JOBZ, which gives tax breaks to businesses.


By Patricia Lopez,
Star Tribune
Last update: March 29, 2007


A tax bill with more than $300 million of homeowner property tax relief and nearly $500 million of business tax increases was passed by the Senate Taxes Committee on Thursday.
The bill would boost state aid to cities, counties and townships, offer property tax refunds and help reduce school levies.

It also takes dead aim at eliminating one of Gov. Tim Pawlenty's most prized programs, JOBZ, which shelters businesses from taxes if they locate in designated areas of the state. Designed to foster job growth in economically distressed areas, JOBZ has been declared a success by Pawlenty and a failure by DFLers.

"It was a mistake," said Senate Taxes Chairman Tom Bakk, DFL-Cook, who sponsored the legislation in 2003. "It didn't work the way I thought it would and it's time to end it."

The bill would end the JOBZ program by May. Any applications not approved by then would have to be withdrawn. Existing companies and those already approved by May would not be affected and would continue their tax-free status.

Pawlenty spokesman Brian McClung said the governor would "fight vigorously" to save the program that was his brainchild.

"There have been tens of thousands of jobs created or kept in Minnesota thanks to JOBZ," McClung said. "This has been an important success story. We think it should be expanded, not eliminated."

Bakk said the program has largely benefited counties such as Olmsted and Stearns, home to Rochester and St. Cloud, respectively, and not the economically distressed counties for which it was intended.

Businesses would be faced with a tradeoff in the bill: $140 million in tax relief, but at the expense of nearly $500 million in tax increases.

More than half of that increase would be born by the state's largest corporations, in the form of even tighter restrictions on foreign operation corporations.

The rest comes in the form of a statewide business property tax increase that would raise property taxes on small businesses about 2.5 percent, while larger businesses would pay about 5 percent more.

For homeowners, Bakk said, the measure should lower their property tax bills by more than 5 percent.