Seasonal & Recreational Tax Base Replacement Aid: SF 1197/HF 1161
MREA members impacted by this legislation should contact their legislators, urging them to see that this legislation is included in the Tax and Education bills under consideration.
Minnesota has a long history of supporting public education, but there’s a problem when a quarter of our school districts are falling behind the operating referendum program. To be fair, the operating referendum was supposed to be for extras, but we know these levy dollars are simply going to pay the bills, to cover student services, and to try and pay fair compensation to school staff.
Most of these zero levy districts are in central and northern Minnesota (link to MREA OpRef Map), the same communities where there’s a lot of seasonal and recreational property that isn’t contributing to the local school operating levy. Previous generations of legislators decided that these properties should pay into a state levy instead, and SF 1197/HF1161 doesn’t change that.
Instead, this legislation is aimed at having the state acknowledge that this property tax wealth is needed to make things fairer for the students in central and northern Minnesota. Here’s how it works:
- The bill creates a seasonal/recreational tax base replacement aid, aimed at reducing the local tax effort required for voter approved levies.
- The bill does not give school boards additional levy authority, as the voters must still be asked and vote “yes.”
- The bill is especially impactful to school districts with a very substantial amount of seasonal recreational residential property.
- The bill could reduce the tax effort by as much as 50% in a district where the cabin market value represents a substantial portion of the total market value.
- The bill does not change how cabins are taxed.
The legislation comes with an initial cost to the state’s general fund of about $9 million to buy down current operating levies where seasonal property exists. We can focus the program even more to those districts that have more than 5-10% of seasonal/recreational property and substantially reduce the initial price tag to the state.
This is a very targeted approach to try and address a major inequity in our school funding system. There are no silver bullets, but this program should help local communities have a more positive conversation as they discuss what an operating levy can do for their students’ education, and what’s a fair ask of local property taxpayers. The Star Tribune recently reported on this issue (link) and we’re providing a draft ‘letter to the editor’ for you to use if this issue is important to you. MREA members impacted by this legislation should contact their legislators, urging them to see that this legislation is included in the Tax and Education bills under consideration.
