House Democrats revive plan for property tax relief
ST. PAUL — House Democrats revived a plan to put bigger property tax refund checks in the mail to most Minnesota homeowners around the time the 2009-2010 school year begins.
The bill unveiled Monday drops a key feature of last year’s plan — a high-end income tax bracket that prompted a veto from Gov. Tim Pawlenty. Instead, the latest version rearranges existing refund and credit programs, subtracting from those who pay less compared to their incomes and sending $207 million in refunds to those who pay more.
The bill’s sponsor, Rep. Paul Marquart, described the revamped proposal as "governor-friendly."
Pawlenty was skeptical but not dismissive when asked about the plan at an unrelated news conference. He stressed that he hadn’t seen it yet. He said having the state buy down property taxes isn’t the best way to keep local governments from raising them.
"I don’t think those are the most effective ways to control or contain property taxes, but we’ll certainly look at their proposal," he said.
The centerpiece of Marquart’s plan is a new homestead credit refund that would kick in for homeowners who make up to $200,000 a year and whose property taxes add up to more than 2 percent of their income. Marquart said the refund would help those who struggle the most to pay their property taxes.
"The more pain you have in the property tax system, the more relief you’ll get," said Marquart, DFL-Dilworth.
The average rural homeowner — with a $60,000 household income and $160,300 home — would get a net tax cut of $101. The amount would be $227 for the average urban homeowner with an $80,000 household income and a $281,100 house.
Marquart’s bill would phase out a market value credit that’s not linked to income and get rid of the itemized property tax deduction on state income taxes.
The bill also contains an extra $53 million for local governments, a provision House Taxes Committee Chairwoman Ann Lenczewski predicted could be troublesome for Pawlenty.
Lenczewski said the House tax bill will be built around Marquart’s proposal, which first stops in the property tax division he heads.