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ing on property taxes held at the
<br /> St. Paul National Guard Armory.
<br /> That darned tax: more than 1,400 angry taxpayers
<br /> © ® © ; demanded local spending cuts
<br /> and property tax limits.
<br /> Reforming Minnesota's In what turned out to be a 10-
<br /> © ©, 1 property tax system month session,the Legislature re-
<br /> sponded with what we've come
<br /> ill - to call the"Minnesota Miracle."a
<br /> term that seems to be wearing
<br /> thin these days.
<br /> That session,the conservative-
<br /> controlled Legislature joined DFL
<br /> •
<br /> Getting set to fix the Gov Wendell Ansts tofan-
<br /> 4 ion a package off statetaxin-
<br /> creases
<br /> and new state aids to lo-
<br /> cal government that was to.once
<br /> and for all.make the property tax
<br /> a relatively minor tax.They raised
<br /> the income tax 25 percent, in-
<br /> creased the state sales tax from 3
<br /> percent to 4 percent, and in-
<br /> proper ty creased beer,liquor and cigarette
<br /> -
<br /> taxes.
<br /> The new money funded in-
<br /> creases in the homestead credit,
<br /> tax new city and county aids, and a
<br /> new school aid equalization for-
<br /> mula that became the envy of
<br /> many other states.They also en-
<br /> Sar
<br /> cz acted local government le 'lim-
<br /> Tri jo/l1 ne, 3;�-3"' f7 its to make sure the new state aid
<br /> translated into intended property
<br /> tax cuts.
<br /> Done carefully, it can be seemedwork.
<br /> On the surface, the "Miracle"
<br /> to From 1971 to
<br /> 1981,property tax levies rose an
<br /> ear, 3
<br /> a win-win proposition pointsaveragelessof5than thepercentp8erpe cent
<br /> inflation rate. Bttt revenue from
<br /> other state and local taxes rose an
<br /> By Dan Satomone average-of 15.5 percent per year
<br /> during that 10-year period.This
<br /> Everyone, it seems, is hoping Coming out of the great De- rate of growth was facilitated by a
<br /> that major property tax reform will pression, when property taxes near-tripling of personal income,
<br /> . be enacted this year. Gov. Arne constituted 75 percent of all state from$4.207 per person in 1971 to
<br /> Carlson and legislative leaders of and local taxes in Minnesota,tax- $11.017 in 1981.Inflation too,was
<br /> both caucuses say they're ready to I payers demanded,and got,local good for the Miracle because tax-
<br /> do it. there's big money on the I spending cuts.in response to the payers' cost-of-living increases
<br /> table,and reform plans abound. ' cry for property tax relief, the pushed them up through 11 tax
<br /> Today,after years of attempts Legislature,in 1933,enacted the brackets ranging from 1.5 percent
<br /> to control it,the property tax gen- Minnesota individual and corpo- to 15 percent.This period could be
<br /> crates about $4.5 billion. That's rate income taxes and alcoholic called the"golden age"of property
<br /> about$500 million more than the beverage taxes, and provided a tax relief — the economy was
<br /> individual income tax and almost more preferential property tax strong, agriculture and mining
<br /> $1 billion more than the state rate for the lowest portion of were strong, and revenue from
<br /> sales tax.This was not the result homestead property values.Tax- state taxes poured in,with much-
<br /> property tax reformers in 1933, payer-induced spending cuts, of it sent back to local government
<br /> 1967, 1971 or even 1991 had in combined with new state aid, to displace property taxes.In 1973
<br /> mind. kept property tax levies below the the cover story of Time magazine
<br /> Yet another round of reform 1930 level until as late as 1946. proclaimed "Minnesota: A State
<br /> will not be easy. Cabin owners During this same period,howev- That Works."Part of what worked,
<br /> expect reform to reduce cabin er, other state and local taxes we thought,was our conquest of
<br /> taxes;seniors on fixed incomes cx- nearly doubled, rising from $62 the property tax.
<br /> pect it will help them stay in their million in 1930 to$113 million in But then came the terrible
<br /> homes;business looks forward to 1946. 1980s. Facing a healthy budget
<br /> having property tax rates more in By fiscal 1962, however, the surplus in 1979,Gov.Al Quie and
<br /> line with those of other states: Minnesota Taxpayers Association the Legislature engineered a$700
<br /> apartment owners hope for a reported that our property tax million tax cut,including income
<br /> more acceptable cash flow on was the highest in the nation.The tax indexing and property tax re-
<br /> their buildings;schools are look- property tax continued to rise un- lief.One year later the Legislature
<br /> ing for more money and less de- til 1967 when pressure to do approved $100 million in new
<br /> pendence on the property tax; something about it led to the en- spending and an additional $16
<br /> counties hope for mandate relief actment of the Minnesota sales million in tax cuts.
<br /> and more categorical aid; cities tax at 3 percent. Within a few months after the
<br /> hope to protect their share of the The proceeds of this new tax 1980 session ended, projected
<br /> state aid.Reformers hear from all were put into a new property tax state budget deficits started to
<br /> these folks,and agree with many relief fund,which,together with pile up.The budget numbers kept
<br /> of them. They also know their new funds from increases in cor- getting worse through most of
<br /> homeowner constituents(voters) porate and bank taxes,deed tax- -1983.The resulting string of spe-
<br /> don't expect to pay more proper- es, the gas tax and new mining cial legislative sessions called to
<br /> ty takes either, and that with a taxes,were used to pay for a new patch the state budget are now
<br /> $2.3 billion projected state sur- homestead tax credit,new school the stuff of budget folklore.
<br />• plus, few of them will support a aids, a senior and renter relief Though there were some good
<br /> major state income- or sales-tax pogrom and an exemption for years during the decade, the
<br /> busi- 1980s were a time of great fiscal
<br /> increase to allow across-the- property taxes on nonutility
<br /> board property-tax reductions. ness inventories and equipment. stress. Because state aid to local
<br /> Consider,too,our history with For the seven years leading up government could not keep pace
<br /> the property tax.We've spent bil- to the enactment of these new with local spending during the
<br /> lions in state aid to buy the prop- relief measures(1960-67),proper- 1980s,property taxes rose rapid-
<br /> erty tax down to"tolerable" ley- ty taxes grew 8 percent per year. ly.Between 1981 and 1993,reve-
<br /> els, trading permanent state tax Then they dropped for a couple nue from property taxes in-
<br /> increases for temporary property of years as they were displaced creased 156 percent.
<br /> tax relief,hut we've never found with new state funds. But from Unable to appropriate the state
<br /> the key to actually controlling it. 1969 to 1971, they resumed a funds needed to sufficiently
<br /> steady march upward, rising 17 underwrite local spending deci-
<br />
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