Editor: Seasonal Tax Base Replacement

…our children are our future and the education we provide them in every corner of the state is the best investment we can make

Aid is Needed for Education Fairness:

The 2001 legislative session saw major changes to the state’s property tax system and one of the results was that seasonal properties, “cabins” if you will, were taken off the school district operating levy tax rolls. The result was an impoverished local tax base for schools to try and convince local voters to levy against. The legislature wasn’t so generous with the seasonal properties either as they now pay into the state’s general business levy. Yes, the state collects property taxes as well as local governments. The result is a $40 million infusion into the state’s general fund from seasonal property tax revenue and on the flip side, 92 school districts, primarily in central and northern Minnesota, are struggling to generate operating levy funds.

Operating levies were created to allow voters to decide if they wanted to have “extras” for students as they journeyed through their educational experiences. However, with state funding for education failing to keep up with inflation over the last 20 years, operating levies are now used to simply pay the bills, for basic staffing, support services, and supplies. This is at a time when schools are being asked to do more for students and families.

State aid for school district levy equalization was the intended program to level the playing field for operating levies, aimed at helping property poor school districts. However, the state has significantly backed away from its share of help in this program. In 2018 the state was pumping in almost $150 million towards $625 million of local operating levies, about 24% of the effort. Fast forward to 2023 and the state’s share has fallen to less than $28 million on just over $810 million in local operating levies, about 3.4% of the effort. All this additional financial burden on local taxpayers is one of the reasons that passing a local operating levy has become more difficult to pass, especially in “lakes country.”

Asking the legislature to restore hundreds of millions of dollars into levy equalization is a tall order and yes, it’s a long-term goal they should make progress towards. However, in the meantime we see a more targeted and cost-effective approach being offered in this legislative session.

HF4986 (Rep. Dave Lislegard) & SF4995 (Sen. Grant Hauschild) would create a “seasonal tax base replacement aid” that would send state general fund dollars to school districts that have voter approved operating levy authority in place, with a further action required by the legislation that the school must then reduce the price of the operating levy locally, based on the aid they receive. The amount of aid is determined based on how much seasonal property is in the school district. Some schools in central and northern Minnesota could see local levy burdens reduced by upwards of 50%.

The legislation is triggered by the existence of voter approved authority and it doesn’t matter when the vote occurred, therefore existing levies would see an immediate reduction of $8.5 million around the state if the bill is passed into law. The legislation doesn’t change how seasonal property is taxed and it still requires voters to approve an operating levy. The growth of this program would be slow as communities discuss the new program and its potential impacts on educational services and taxes. It’s a pragmatic approach that comes with a cost of several million to the state instead of hundreds of millions to the state when compared to traditional levy equalization programs. Lastly, the legislation is a recognition of the state’s taking of this seasonal property and that it is needed to create more fairness in our education funding system.

What can you do? Contact your State Representative and Senator. Ask them to become a co-author on HF4986 and SF4995. Ask them to also advocate for the passage of this bill. You can also spread the word about the bill. Ask others to also get engaged in helping get this much needed bill passed.

All students in Minnesota deserve fair and equitable funding, and the disparities in school levy programs must be addressed. Our children are our future and the education we provide them in every corner of the state is the best investment we can make. It will take all of us to make sure this bill comes to fruition, but the seeds have been planted. Now, let us continue to water it and watch it bloom and grow. Our children are counting on us, so let’s get it done!!

John Ward Brainerd, MN