WORTHINGTON - A new bill being heard today by the Minnesota House Property Tax and Local Government Finance Division is drawing ire from Worthington officials.
The bill (HF 3830), chief authored by District 31B Rep. Cal Bahr, R-East Bethel, would shift local government aid (LGA) away from cities that have imposed a local option sales tax by including sales tax revenue in the LGA formula’s measure of tax capacity.
The changes would be phased in over five years. According to House Research Services, roughly $3 million would be shifted away from cities with a local option sales tax to those without one in 2019. By 2023, that number would reach $39 million.
Worthington is one of 31 cities that have imposed a local option sales tax or are authorized to impose one. City officials criticized the proposal during a meeting Monday.
“They want to take the LGA away from communities that have sales tax and give it to the other community … they’re trying to divide us,” said Mayor Mike Kuhle.
The bill is primarily authored by Republican metro legislators. However, District 23B Rep. Jeremy Munson, R-Lake Crystal, and District 21B Rep. Steve Drazkowski, R-Mazeppa, are also sponsors of the bill.
“If I lived in Lake Crystal, I would be very unhappy with my representative right now to be authoring a bill that would do such a thing to an outstate community like that,” said councilman Chad Cummings.
City Administrator Steve Robinson said property taxes in Mazeppa - a small 830-person city north of Rochester - are 34 percent higher than in Worthington.
“We have a lower tax capacity from local property taxes as it impacts our citizens,” Robinson said, noting that sales taxes, unlike property taxes, are paid by passersby and visitors rather along with residents.
Worthington received more than $3.2 million in LGA last year. A significant decrease would lead to property tax increases, cuts or both.
“I think our local councils know best what their citizens want and how to run their cities, and we’d all be better off the less the state intruded in our business,” Robinson added.
The bill will be heard by the House Property Tax and Local Government Finance Division Wednesday at 8:15 a.m. District 22 Sen. Bill Weber, speaking during a Worthington event Saturday, said he would defeat any measure that ties LGA to local sales tax.
A second LGA bill, authored by Rep. Jerry Hertaus, R-Greenfield and Sen. Mark Koran, R-North Branch (HF3892/SF 3518), would eliminate LGA and replace it with a program that measures state aid based on population and sales tax revenue. The bill has been criticized by the Coalition of Greater Minnesota Cities as benefitting populous metro communities.