Wednesday, February 15, 2012

Wednesday was Tax Committee Day. Most of SEE's action today came while watching the House and Senate Tax Committees. Both the House Property Tax Division and full Tax Committee heard a presentation by Julie Berlands, a principal with the Maryland-based analysis firm of TischlerBise on Minnesota's Fiscal Disparities Program. The study was commissioned by the Legislature in 2010.

The Fiscal Disparities Program--a tax-base sharing program for the 7-county metropolitan area--was established in 1971 as a lesser-known provision in the Minnesota Miracle Framework. Under the program, 40% of the growth in the commercial/industrial tax base in every metropolitan area city/township goes into a metropolitan area pool, where it is re-distributed to help hold down property taxes in areas with lower levels of property wealth (Warning! This is a very simplistic explanation of the program.).

Obviously, the areas with higher levels of commercial and industrial property don't like the program much, as they are generally contribute more to the pool than they receive in benefit and believe that to be unfair. While I can understand their unhappiness, the yield/effort ratio in those areas is still considerably higher even after their contribution to the fiscal disparities pool than it is in the lower property wealth areas that receive benefits under the program.

The tax base for a number of school levies is affected and it is also an advantage for low property wealth school districts in the metropolitan area. While the report contains no recommendations that would reverse the program, doing so would be disastrous for these districts--many of which are SEE members--by heightening the property tax sensitivity in these areas. I was set to testify and point this out, but time ran out at both hearings.

Meanwhile in the Senate. Eric Naumann had the opportunity to finish his presentation on property tax levies in the education funding system this morning. As you recall, he ran out of time due to spirited discussion when he started his presentation a couple of weeks back. Today's hearing also featured testimony by SEE member Central School District's Superintendent Brian Corlett. Dr. Corlett gave a great synopsis of the "world according to SEE," pointing out a number of inequities that exist in the current array of property tax levies.

As I said the last time the Senate Tax Committee covered education funding, I really want to commend Chair Julianne Ortman (R-Chanhassen) and Senate Fiscal Analyst Eric Nauman for their great work; Senator Ortman for putting this issue on the radar and Mr. Nauman for doing such a comprehensive job explaining a very complicated subject.

The Senate Tax Committee will be covering the Fiscal Disparities Program tomorrow.

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