Lawmakers Wonder About Dayton Budget’s Rural Impact

By Don Davis

Gov. Mark Dayton says his budget plan favors greater Minnesota, but rural legislators are not so sure.

The Democratic governor said property tax relief like he proposes is most needed by rural Minnesotans, where the tax has soared in recent years.

On top of that, few of the state’s richest 2 percent live outside the Twin Cities, so the burden of his tax-the-rich proposal avoids much of greater Minnesota.

Dayton suggests that increased funding for a variety of economic development programs also helps areas outside the Twin Cities.

“Those programs tend, I think, to be weighted strongly to greater Minnesota,” he said.

The $38 billion, two-year budget Dayton released Tuesday stretches more than 2,000 pages and legislators who must approve state spending and taxing say they need to see details before making specific comments about the budget.

Greater Minnesota Democrats generally are happy with the Dayton budget’s tone.

“This budget is much friendlier to rural communities of Minnesota,” said Sen. Kent Eken, DFL-Twin Valley, comparing it to those of the past decade when Republicans controlled much of what went on.

Dayton and fellow Democrats will make most of the decisions about the state budget and tax policy, holding majorities in both the House and Senate. Republicans can do little more than complain.

“We have been very concerned about whether rural Minnesota will be left behind in the governor’s budget,” House Minority Leader Kurt Daudt, R-Crown, said.

Democrats especially like the $500 property tax refund most homeowners would receive.

The refund would be minimal, said Sen. LeRoy Stumpf, DFL-Plummer, when compared to the value Minnesotans would receive from a properly balanced budget.

Even so, Eken said that “in our family that ($500) would be significant.”

Stumpf guessed that 80 percent of Dayton’s proposed tax increases would be paid in an 11-county Twin Cities area.

Farmers have been among the most vocal opponents of continued property tax increases, and Renville County farmer Gary Wertish said he is glad the issue is going to be discussed.

As vice president of the Minnesota Farmers Union, Wertish said he is awaiting a more thorough explanation of what Dayton’s plan includes.

“People will not be taxed out of their homes,” said Commissioner Tony Sertich of the Iron Range Resources and Rehabilitation Board. “This stabilizes things.”

Farmers would pay sales taxes on most services under the Dayton plan. But farm machinery, seed, fertilizer and livestock purchases would remain exempt. Farm machinery repair labor would be newly taxed, although machinery repair parts would not.

Rep. Paul Anderson, R-Starbuck, said a farmer could pay taxes on repair bills (for combines that can cost up to $500,000 and tractors that sometimes cost more than $100,000) that would eat up the $500 property tax refund Dayton suggests.

“It is definitely something I will be looking for,” Sen. Lyle Koenen, DFL-Clara City, said about added farm taxes. “We’re digging into it.”

Daudt raised doubts about Local Government Aid, state payments to cities that Dayton wants to increase by $30 per resident in most cities.

The legislator, however, said that St. Francis in his area would get $50,000 less while Minneapolis would see a $12 million boost under the governor’s plan.

The Coalition of Greater Minnesota Cities praised Dayton’s “long overdue” infusion of money into LGA, but President Bruce Ahlgren, Cloquet’s mayor, added: “We will need to evaluate in the coming days and weeks the governor’s proposed LGA formula change.”

Dayton and other Democrats said the proposed increases in education funding are good for greater Minnesota.

Stumpf said that while increases Dayton proposed to education are good, they do not solve long-term funding issues.

“I’m hoping to modify some of what the governor” suggests for education, Stumpf said, to provide dependable permanent funding.

Rep. Tim Faust, DFL-Hinckley, said that districts have different taxing abilities. “It’s still significantly harder for our local schools to raise revenue through local levies than for schools in suburban districts.”

Dayton touted his plan to give schools $52 more per student. Stumpf called that “a little bitty help.”

Any new education money is especially helpful to greater Minnesota, Democratic lawmakers said, because a better education is key to keeping youths in those areas.

The current Jobs Opportunity Building Zones program is about to expire. Former Gov. Tim Pawlenty and Republicans set it up to help rural Minnesota’s economy. In its place would be the Minnesota Job Creation Fund, which would not be limited to greater Minnesota but Dayton said would be of special help there.

The Dayton administration says $25 million it wants to put in the fund would attract $450 million of private investment. It would target funds on a case-by-case basis for companies wanting to locate or expand in Minnesota.