Column: MREA take on ‘Ag2School’ is misleading at best
Editor’s note: The following column was submitted by Don Brink & Rob Kremer, co-chairs of the Worthington Citizens for Progress Committee.
The Minnesota Rural Education Association’s (MREA) recent editorial in The Globe (Nov. 25 edition) was an exercise in wordsmithing which we suspect came from District 518’s new public relations consultant, Jeff Dehler, hired with taxpayer money to help pass the bond referendum.
MREA can appear confident when its “special interest” financial supporters want to line their pockets by wasting taxpayer money. But the homeowners, businesses and landowners still assume all the risk when their bold assurances evaporate like a morning mist a few years after we’re committed to $133,602,000 of future taxes. And we’ll be stuck with this ball and chain long after the Twin Cities bond dealers, architects and contractors — providing major financial support for this “rural” education association (MREA) — have collected their huge fees and moved on.
The MREA’s point, as we read it, was that the new Ag2School Tax Credit will be the “salvation” of extravagant school buildings for rural school districts. They wrote that the tax savings from this new state tax credit applied to District 518’s existing debt service payments in FY2018 is $324,590. This is close to the $303,557 the Minnesota Department of Education calculated would be the tax credit for this year.
The MDE further calculates that ag land (Non HGA 2a, 2b & 2c classes) for this year is funding 49 percent of District 518’s current debt levy. Let’s assume this proportion of debt service funded by ag land stays at 49 percent going forward. The current proposal, if passed by voters, calls for a debt levy to cover existing and new debt in FY2020 (first full year) of $4,837,000. Forty-nine percent of this levy is $2,371,700, which would be covered by the ag base that first year. The state’s new annual ag tax credit of 40 percent applied to this amount would equal $948,700. To summarize, the projected new property tax levy of $4,837,000 would be discounted by $948,700, leaving a net due that first full year of $3,888,300.
Now to be very clear the total taxes over the life of the bonds, both from existing levies and proposed levies (if the $68.5 million bond passed Feb. 13) as projected by District 518’s financial advisor, would be $133,602,000. The only ag tax credit funded by the state of Minnesota is for this first-year amount of $948,700. After that first year, the remaining $128,765,000 ($133,602,000 - $4,837,000) would stand as an obligation of local taxpayers and with no future funds appropriated for the ag credit.
Remember, Minnesota Law 273.1387 (School Building Bond Agricultural Credit) (Subd. 5) says, “An amount sufficient to make the payments required by this section is annually appropriated from the general fund to the commissioner of education.”
So what exactly does MREA mean when it wrote in its editorial, “…reducing the [sic. ag. tax credit] program would mean a vote for raising taxes on the backs of rural Minnesota farmers and harming equity in school funding…” ? Consider that the word “vote” in one ordinary sense in the dictionary means “to exercise a political franchise” — that is, to cast your vote for a candidate, or by a legislator casting his/her vote on a proposed bill. But in a less common usage, “vote” also means “to cause to be cast for or against a proposal” — that is, to cause something to happen.
When the MREA wrote that reducing the program would mean a vote for raising ag land taxes, understand it means this would “cause” an ag land tax increase. They do NOT mean that the legislators would have to vote to raise ag land taxes —that is, where pressure could be applied.
Just a few liberal legislative leaders would call this a ‘tax loophole’ for farmers and just not include the annual appropriation for the ag land credit into their routine education appropriations bill for that year. And most of the other legislators (especially metro) then remain silent or play ignorant and presto — agricultural land taxes for debt service levies would go up the next year. Just ignore the appropriation; it’s that simple!
Then MREA wrote, “….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…” What farm groups would they be referring to? The Minnesota Corn Growers Association (MCGA), who are also members of their MREA? This, the same corn growers group who have angered many Minnesota farmers by sitting on the sidelines (with most the other farm groups) a few years ago and did nothing while the governor and legislature stole the use of some of their land (with no compensation for the “taking”) under the Buffer Strip law that went into effect a few weeks ago?
Why should we expect the same MCGA (and friends of the MREA) to remain diligent — annually, no less — on the appropriation needed for this Ag2School tax credit, let alone lift a finger when alerted that it has been left out of the appropriation? Even if they did act, could they override metro legislators who want to leave it out?
The only real way to protect the property tax base of all District 518 property owners is to join us Feb. 13 and Vote NO!