By Daniel E. McGonigle
The Caledonia Argus
On Monday, Feb. 20, Caledonia area schools superintendent Ben Barton testified to the Senate Education Finance committee in an effort to revive tax relief for district taxpayers.
He shared with the committee that Caledonia had built a new MS/HS and retrofit what is now the elementary school in 2001.
“A portion of the project was funded with a local bond and the remaining approximately $14.1 million was funded with a maximum effort capital loan from the state,” he stated.
Barton shared the burden that taxpayers have carried in the 15 years since the maximum effort capital loan was approved.
Chief among these burdens is the terms of the loan that requires taxpayers to be taxed at a “maximum effort rate.”
“This rate is 29.39 percent of the adjusted next tax capacity of the property located in our district,” Barton told the committee.
In 2011, the state passed a law that gave many districts with outstanding maximum effort capital loans the opportunity to pay off their loans by paying only the original principal amount and essentially forgiving all interest accumulated on the loan since its inception.
However, this bill only covered districts whose loans were authorized prior to Jan. of 1997.
During the last session, a bill was passed that would allow districts who had taken similar loans prior to 2007 to have similar forgiveness options as addressed by the 2011 law.
It was part of the larger tax bill which was supported by 89 percent of house and senate members.
However, Gov. Dayton used what is called a ‘pocket veto’ and allowed the tax bill to fail without signing it into law based on some language in the bill relating to bingo halls in St. Cloud.
“Last legislative session passed legislation that allowed districts receiving capital loans after 1997 to receive the same option as those districts included in the 2011 law. In addition, most capital loan districts refunded their loan with a local bond and paid back the state this last November. This was due to the elimination of one-day bond options and incentive aid that the state offered,” Barton told the committee.
One day bonds
You’ll recall that Caledonia has held back several one day bonds over the past few years, each time in the amount of $495,000 and by voter approval.
A bill that passed, however, took away that funding mechanism in exchange for tax relief.
Caledonia area schools saw over $3 million in relief as a result of this legislation which was passed last year.
As Barton testified, senator Jeremy Miller (Rep. Winona) has brought forth a bill which would attempt to “bring fairness and equity.”
“Language that Senator Miller has proposed in the bill is being considered,” said Barton. “This bill is essentially a bill of fairness and equity. As previously stated, the majority of capital loan communities paid little to nothing on the loan principal and interest. However, a few (Caledonia included) paid millions to the state in principal and interest. This was due to the significant increase in agriculture assessed land value. Our Annual Net Tax Capacity (ANTC) went up significantly and therefore our resident’s taxes went up significantly because the terms of the loan required residents to be taxed at 29 percent of ANTC. Essentially our AG community in our area shouldered the burden of these significant tax increases due to the increased assessed value of their land for over 15 years. As you know, assessed property value doesn’t reflect the actual dollars they had in their bank account.”
Barton stressed that the committee strongly considers passage of the bill.
“This bill provides property tax credits equal to the interest each district paid back to the state,” he said. “Only districts that paid down on their interest to the state would benefit from this bill. We are simply looking for the same benefit as the many districts received from the law passed in 2011. Again this is about fairness and equity.”
Barton told the Caledonia area school district that the committee passed the bill and it will now be sent to the Tax Finance Committee where he will once again testify on behalf of Caledonia area taxpayers.
Superintendents and community members from other districts with a similar situation have also joined Barton to testify to the house and senate committees.
“It’s a process,” he told the school board.