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Increasing property taxes causing concern

MORA, Minn. (AP) -- Fran Bachman and his son own 540 acres of pasture just outside this central Minnesota town. The land is as bare today as it was last year, and the year before that.

But that didn't stop their property taxes from increasing 25 percent, he said, in both of the last two years. "They're going up like crazy," said the 68-year-old variety store owner. "It's ridiculous. It's terrible."

Bachman's tax bills reflect the rising property values in Kanabec County, a largely rural county about 90 miles north of the Twin Cities. But if the land is so valuable, he wonders, why is Mora's main street dying? Why is business at Bachman's Variety and Crafts so poor?

"Something is out of line here," Bachman said.

Local property taxes are always a raw issue at the Capitol, and this year more than most. Democrats have tarred Gov. Tim Pawlenty with charges that his budget decisions force counties like Kanabec to rely ever more on property taxes -- making his oft-repeated "No New Taxes" pledge a sham, they argue.

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The Republican governor has a controversial response that could keep property taxes down for people like Bachman. But it also could choke off resources for county leaders who say they're already struggling to get by.

Pawlenty introduced the tongue-twisting "Turbocharged Truth in Taxation" proposal at his State of the State address in January. Under the plan, a "Taxpayer Satisfaction Survey" would be mailed along with the existing Truth in Taxation form that's sent to property owners every November.

The survey would ask: "Are you satisfied with the proposed property tax levy" for the county and city where the property is located.

If the number of responses checked "no" exceeds 20 percent of all the forms returned, a referendum on the levy would be triggered. Voters would choose whether to accept the new levy, or to hold property taxes to the previous year's level. It would apply to all but school taxes.

"It's a customer satisfaction survey," said Rep. Phil Krinkie, R-Shoreview, sponsor of Pawlenty's plan. "It's increasing communication between the elected officials and the taxpayers they represent. Seems to me it's pretty simple and pretty straightfoward."

Dan Salomone, Pawlenty's commissioner of revenue, said it's part of the governor's effort to bring greater spending accountability to all levels of government.

"It's very convenient year after year for some folks to point a finger at the state, and say the reason property taxes are so high is because legislators didn't provide enough aid," Salomone said. "I'm one of those who feels we need more accountability so we can get away from the blame game."

Jim and Debbie Maker, the owners of Mora's Mustang Steak House, weren't familiar with Pawlenty's proposal. But both liked the sound of it.

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Debbie Maker said she worries that local residents aren't engaged with government decisions, and said the new truth in taxation process might get more people involved.

"It gives people a choice, it gives them some responsibility," she said. Her husband added: "You can't blame the people in charge, because no one gets involved. Maybe they'd appreciate a little bit more direction."

City and county officials, most of whom hate the proposal, say it's a simplistic answer to a complex problem. They say the biggest driver of county budget problems in recent years are state cuts to local government aid.

Kanabec County's state aid dropped from $1.3 million in 2003 to $854,000 this year. "Four hundred thousand dollars may not sound like much, but to a small, poor county like us ... that's a lot of money," said County Coordinator Alan Peterson.

During that same period, the county budget rose by about $1 million. The problem, Peterson said, is that even while state aid has decreased, state officials haven't eased up on the duties and services it requires counties to provide -- the so-called "mandates" that have become a dirty word in county circles.

Peterson estimated that 87 percent of county spending is to conform with state mandates. For Kanabec County, the biggest costs are for law enforcement and housing of prisoners.

The laws and sentencing guidelines are set by the state, but must be carried out by a county with seven deputies, a 22-bed jail and an exploding methamphetamine problem.

"If they can reverse our tax increases, then we should be able to reverse the state mandate that caused it," Peterson said.

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Some county residents said they understand these pressures. Les Stromberg, a Realtor who lives in nearby Brunswick Township, has seen property taxes on his own home rise about $1,000 in the last 10 years. But he understands why.

"If people are just against taxes -- which they are -- that's fine," Stromberg said. "But then in the next breath it's, 'You better keep plowing my snow.' Do we get rid of deputies? Do we not plow snow? How about we not put tires on the trucks?"

Kanabec County has seen rapid residential growth in recent years as people who work in the northern suburbs move farther and farther north in their quest for cheap land and large lots. As farmland transforms into residential property, Peterson said, the county takes a hit on the tax rolls.

"That seems counter-intuitive, but the thing is farmland doesn't require that you provide it any services," Peterson said.

As people move in, businesses haven't followed. No four-lane highways enter Kanabec County, making it difficult to attract industry and putting all the more pressure on residential taxpayers.

"It's got to come from somewhere," Peterson said.

Pawlenty's turbo-charged proposal faces skepticism at the Legislature, even from fellow Republicans. "What is it about local government that you dislike?" Sen. Bill Belanger, R-Bloomington, asked Salomone at a recent committee hearing on the issue.

The Senate DFL's tax whiz, Sen. Larry Pogemiller, has introduced his own legislation to address local property taxes -- a straight-up freeze on increasing them, though that legislation seemed more intended to make a point about Pawlenty's fiscal stewardship.

County leaders, meanwhile, feel like they're caught in the middle.

"It's not a give and take system right now," Kanabec County Sheriff Steve Schulz said. "It's the state taking. You say 'No New Taxes' -- OK, great, great. But it's still government paying the bill. Government is government."

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