Tax bill has multiple dividends for region

PAUL -- The tax bill signed into law Tuesday by Gov. Mark Dayton is headlined by $650 million in tax cuts. However, it also includes language that specifically impacts the Worthington area and southwest Minnesota.

  1. PAUL - The tax bill signed into law Tuesday by Gov. Mark Dayton is headlined by $650 million in tax cuts. However, it also includes language that specifically impacts the Worthington area and southwest Minnesota.

Worthington half-cent sales tax A measure in the bill allows the city of Worthington to collect on its half-cent sales tax up to $7.3 million, up from the original $6 million limit imposed when voters approved the tax in 2008.

Of the extra funds, $1.2 million will be used to pay off the Buss Field reconstruction project, and the remaining $100,000 will go toward new seating at the Memorial Auditorium Performing Arts Center. To this point, the tax has paid for the construction of the Worthington Event Center and renovations at Memorial Auditorium.


The city council must hold a public hearing on the tax, and vote to approve the measure. Citizens will have 30 days to petition for a reverse referendum to strike down the measure if they disapprove.



If approved, the tax will cease when the $7.3 million figure is met. The city will ask the legislature to authorize a new local option sales tax in 2019, which could bring in an estimated $10 million over 10 years.

Ag tax credit Starting in 2018, the tax credit will provide 40 percent property tax relief to farm property for taxes paid on school bonds.


The measure is meant to help school districts pass referendums, as well as provide tax relief for farmers paying for existing bonds. In 2015 and 2016, nearly 60 percent of school bond referendums were defeated in rural Minnesota, where farmers are disproportionately affected by property tax increases that go along with school bonds.


Referendums have been easily defeated in recent years in Worthington and Mountain Lake, with a majority of farmers voicing strong opposition.

Local government aid (LGA) The bill will increase LGA by $15 million per year, starting in 2018.



For cities like Worthington, LGA is the primary funding source, making up more than 40 percent of the city’s revenue. Under the measure, Worthington will see a bump of about $84,430 next year.


LGA was cut significantly from 2003 to 2013, forcing cities to make cuts in services. With the increase in place, LGA funding will not return to 2002 levels next year.


County program aid (CPA)

The tax bill increases CPA payments by $25.5 million per year starting next year and changes the formula to provide a base level of funding to counties that have been hit hard but CPA cuts in years past.


Nobles County would have a CPA increase of $98,406, or about 15 percent.


Southwest Minnesota counties will see some of the biggest CPA increases. Here is how their CPA appropriations would be affected in 2018, according to estimates from the Minnesota House Research Department:

Pipestone: From $175,347 to $528,361, a 201 percent increase.
Murray: From $149,895 to $502,874, a 235 percent increase.
Cottonwood: From $233,988 to $587,080, a 151 percent increase.
Jackson: From $164,632 to $517,632, a 214 percent increase.
Rock: From $167,650 to $520,654, a 210 percent increase.


State budget issues meant cuts to CPA from 2008 to 2011, and the numbers, before now, had not recovered. Rural, agriculture-dependant counties with low populations have been hit the hardest by falling CPA numbers, as agricultural land values messed with the formula.


Rock County, for example, over time lost more than $800,000 of its CPA in just a few years, bottoming out around $130,000. The county underwent a hiring freeze, downsized a number of departments and increased the levy to make ends meet.


“For us, at our time, where our levy was roughly $4 million, so when you lose $800,000, that’s nearly 20 percent,” said Rock County Administrator Kyle Oldre. “That’s just not fair.”


Oldre was happy with the increase in funding, but noted it would likely be cancelled out by a provision in the Health and Human Services bill that shifts the responsibility of funding MnCHOICES, a program for disabled citizens, to county governments.

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