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New taxes have benefited outstate Minnesota, think tank says

DETROIT LAKES — Minnesota’s DFL-controlled Legislature raised income taxes last year on the top 2 percent of earners and levied a 75-cent-per-pack cigarette tax.

It also approved three business-to-business sales taxes, which were dropped this year.

Bracing for an onslaught of Republican ads attacking DFL incumbents for raising taxes last year, the think tank Minnesota 2020 has decided that the best defense is a good offense.

Founder and board chairman Matt Entenza, a former Democratic-Farmer-Labor Party leader, has been traveling the state to tell people the new taxes have benefited the vast majority of Minnesotans, including those in Becker County.

Over the past 10 years or so, under Republican Gov. Tim Pawlenty and later under Republican legislative leadership, “aid for cities and schools went way down, so property taxes went up to offset it,” Entenza said during a stop last week in Detroit Lakes.

In the Detroit Lakes School District, for example, state aid fell nearly 16 percent from fiscal year 2003 to 2012, and the property tax levy rose by 670 percent.

Even with the higher property taxes, which peaked at about $800 per student in 2011, the district’s overall revenue fell by more than 7 percent during that time period.

Under DFL leadership — from 2012 to projected 2015 — state aid to Detroit Lakes Schools is up more than 7 percent, the property tax levy is down more than 16 percent, and overall revenue is up 5 percent.

Under Republican leadership, state aid to the city of Detroit Lakes, called Local Government Aid, fell drastically from nearly $2.3 million in 2002 to $707,000 in 2012 — a 69 percent cut.

Under DFL leadership it fell further to $703,000 last year before being boosted to $782,000 this fiscal year.

“If you adjust for inflation, you had a 65 percent decrease in Local Government Aid,” Entenza said. “Gov. Pawlenty tried to eliminate the program. … Our position as LGA is especially important to regional centers like Detroit Lakes.”

The DFL also beefed up the property tax refund program, particularly for seniors and low-income residents. “But most folks are probably going to get something,” he said.

The renter’s credit also got a boost. Entenza says taxpayers should take a close look at those programs to see if they qualify.

Gov. Mark Dayton “supersized the renter rebate and the homeowner credit,” Entenza said. “We don’t think these things should be partisan, but the reality is Gov. Dayton has been much more supportive, and as a result, people are going to get their property taxes down.”

When the new refund program is calculated in, the average property tax bill in Detroit Lakes fell by 19 percent from last year to this year, from $1,600 to about $1,300. That’s one of the most substantial reductions in outstate Minnesota.

“Cities in this area do particularly well with the residential rebate,” Entenza said.

“Critics say taxes are up, up, up,” Entenza said. “The truth on the ground is that taxes are going down — as long as people file for those rebates, they’ll see about a 20 percent reduction on their property taxes.”

And those rebate checks are often spent locally, helping the local economy, he said.

New spending is only beginning to make up for 12 years of substantial cuts, Entenza added.