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Letter: ‘Ag2School’ seems unlikely to aid building projects

By Don LeSage, Alexandria The School Building Bond Ag Credit, also referred to as Ag2School, provides the owners of agricultural land in Minnesota with a 40 percent tax credit on the school building bond portion of their property tax bill. The pu...

By Don LeSage, Alexandria

The School Building Bond Ag Credit, also referred to as Ag2School, provides the owners of agricultural land in Minnesota with a 40 percent tax credit on the school building bond portion of their property tax bill. The purpose of this tax relief is to protect ag property owners and farmers from school districts that have voted to outspend their tax base. And even though the Ag2School tax relief was created to help offset the consequences of overspending, it is now being used as an excuse to ignore local tax impacts and to spend even more. What is the problem with justifying a new school building project today with the Ag2School tax credit?

One of the glaringly obvious problems is that the tax credit is not guaranteed for the life of the bonds. With some of these bonds lasting upwards of 30 years, what happens when the state’s budget gets tight again and it's time to make cuts? It isn’t hard to see that the now-championed Ag2School tax credits - or “tax loopholes,: as they’ll be called in few years - will be the first to go. So how does the uncertain future of the Ag2School credit impact school building bond votes?

When voters become aware that this tax credit could change with every biennium, they come out in large numbers and vote no. Why? Because the mere existence of Ag2School really gives credence to the concerns that school districts are spending way beyond their means. After all, why would the state need to step in and give tax relief if there weren’t some deep systemic problems that weren’t being addressed properly? So what are our elected officials saying about this situation?

In an article posted last week on The Globe’s website, State Revenue Commissioner Cynthia Bauerly said that the (Ag2School) credit will “help communities come together” for future school building construction. The article also reported that Rep. Ben Lien said he “believes the state can do more to lower [ag] property taxes, though how much will rely on the November revenue collections report.” If Lien admits that the ag property tax relief is reliant upon revenue collections, then how will this tax credit (with its uncertain future) bring communities together to vote for more debt?

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It won’t. This past summer, I was actively involved in the Brandon-Evansville ISD #2908 school building bond referendum where the district’s voters gave a resounding 72-percent no vote. I’m confident that the Ag2School tax credit actually helped strengthen the opposition to the now-defeated referendum. I believe that voters want the state to fix the underlying issues with school funding before they are asked to vote themselves into 20 to 30 years of debt.

Related Topics: EDUCATION
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