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Column: Forty-percent ag bond credit starts in 2018

By the Minnesota Rural Education Association

The 40 percent agricultural bond credit, known as Ag2School, will take effect with property taxes certified in December of 2017 and payable in calendar year 2018.  Owners of farmland will see the reduction in the upper right hand corner of their Truth-in-Taxation notices this month.

The Ag2School credit applies to all current and future bond referendums, as reported by Minnesota Representative Paul Anderson in a report from the Council of State Governments. “If a landowner’s levy for school building referendum was $25 per acre, for example, the state would provide him or her with a credit of $10 per acre (40 percent).”

In the Worthington School District, Ag2School will reduce 2018 property taxes by ($87.03) per $500,000 value of agriculture and privately managed forestland. This will total an estimated $324,590 of tax relief for landowners with land in the Worthington School District.

In 2018 Ag2School will deliver on average $129 in property tax relief per $500,000 of agriculture land value, privately managed forestland across Greater Minnesota, and help improve farmers’ economic outlook.

“This Ag2school legislation provides landowners tax relief not only on new bond referendums, but existing referendum and creates a more equitable tax structure that allows for landowners to consider presented construction bond referendums” stated Joel Lorenz, school board member and landowner.

This agricultural bond credit passed into law in June and continues to have a broad base of bipartisan support. It is permanent law, existing into perpetuity, as stated in the appropriations portion Subdivision 5 of the statute: “An amount sufficient to make the payments required by this section is annually appropriated from the general fund to the commissioner of education.” It would take an act of both bodies of the legislature and a signature by the governor to amend or repeal the Ag2School credit program.

“Repealing or reducing the program would mean a vote for raising taxes on the backs of rural Minnesota farmers and harming equity in school funding for kids and parents,” said Sam Walseth, Director of Legislative Affairs for MREA. “Not only is this extremely unlikely, but the strong coalition of like-minded rural interests (MREA, farm groups and others) would link arms to defeat any attempt to renege on the 40 percent credit to landowners for school facilities for rural children’s education.”

Many schools in rural Minnesota have pressing facility needs that are necessary to provide high quality educational services in their communities. Ag2School will also create a healthier environment for communities to solve their school facility needs with a reduced financial impact to our farmers.

The estimated impact of the proposed bond referendum for taxpayers would be $147.86 per year, or $12.32 per month on an average valued home of $115,000 in District 518. On a commercial/industrial property valued at $250,000, it would be $713.28 per year or $59.44 per month. On an agriculture homestead with a home valuation of $175,000 and assuming 160 acres, the estimated tax would be $818.00 per year or $68.17 per month after the Ag2school credit. On a non-homestead agriculture property with a valuation of $7,000 per acre, the estimated tax would be $7.05 per acre after the Ag2school credit. A tax calculator will be available for residents to check in early December that will provide a more accurate estimate of the tax impact.  

We would encourage you to consider checking this out once it is available on the School District web site @ where you will be able to find all the information related to the bond referendum.