Senator John Pederson (R-St. Cloud) is proposing spending $126 million to give all businesses property tax relief, but his proposal has no mechanism to pay for it. Senator Tom Bakk (DFL-Cook) says if this were a “serious” proposal, there would be a way to pay for it, particularly when the state still owes more than a billion dollars to schools and this money would be paid to businesses before the schools would be paid back.
Senator Bakk also says he does not believe such broad based property tax relief would create jobs as the Republicans claim it would.
“I’m just not sure that when we cut the property taxes for McDonald’s corporation or Walmart or my friend John Menard or Home Depot, out-of-state corporations especially in the retail business, that they’re going to add jobs in Minnesota. I don’t know what changes in the retail sector that makes them a couple extra people at the McDonald’s counter or at the register at Walmart or an additional greeter or does the money just flow to the corporate bottom line in those states with those corporate offices. That’s my concern.
“We should have a good discussion about it if this does add jobs. But what really bothers me, Senator Pederson, by the fact that it’s not paid for, is you are putting this tax relief for those out of state companies ahead of paying back our schools. Last year we borrowed over two billion from our schools. This year they’re borrowing over five hundred million dollars, our K-12 schools in order to pay their bills because we’ve delayed payments to them. And now in the next biennium we’re going to say the first 126 million that comes in, we’re going to buy down property taxes before we’re going to pay back the schools the money we owe them.
“That’s why Senator Pederson I really think if you could figure out a way to pay for this I think we could have a good conversation about doing something that might stimulate the economy. But absent paying for it, the idea of doing this for those corporations that aren’t located in this state and putting them ahead of our own K-12 schools is troubling to me. ”
Senator Julianne Ortman (R-Chanhassen) says such property tax relief would stimulate the economy. “One business owner said if I had that money I would recarpet my premises and do upgrades. Well that’s economic activity in his community!”
Senator Pederson said the reason St. Cloud doesn’t have a Costco is because the property taxes are too high. Senator Dibble disagreed.
“The presence of a Costco is a function of something else . Costco is going to come to Minnesota because there is going to be folks who have decent well paying jobs who can actually buy stuff.
“I hope we’re not gearing our tax policy and our economic development priorities around attracting retail all over the state. That’s not going to be what gets the state off the dime and moving forward,” said Senator Dibble. “So I hope we’re not going to be running around chasing a bunch of retail establishments and driving their property taxes down and calling that some sort of economic development engine. Because that would be a quick race to the bottom.”