Farmers: Taxes making job harder

Published 10:10 am Monday, January 26, 2015

ALBERT LEA — Southern Minnesota residents — and particularly farmers — aired concerns about an unfair property tax system on Saturday during a listening session in Albert Lea.

In front of the Property Tax and Local Government Finance Division, farmers young and old explained how rising property taxes have made it difficult to get into farming and equally as challenging to retire from the industry.

Resident Jack Korman, who farms south of Alden, said this year his Freeborn County taxes are going up 10.7 percent alone.

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Rising taxes make it challenging to retire because a larger portion of their earnings from renting their land are having to be put toward taxes, he and others said.

“When it comes time to retire, my IRA is my farmland,” Korman said. “It’s gotten out of hand.”

The challenge has come as the price of agricultural land has increased in the last few years. Even if cities and counties did not pass increases in their levies, taxes for agriculture land have increased simply because the land values went up.

New farmer John Knutson, who farms within the United South Central School District, said taxes make young farmers such as himself not even want to get into farming.

He also noted taxes collected should go toward roads.

Brian Hensley, a financial adviser with Intego Financial Group, asked the committee to consider looking at a five-year average on farmland values when considering assessments.

He also called for the Legislature to reign in its spending and said if there is a surplus it should go back to the people.

Sandy Forstner with the Austin Area Chamber of Commerce asked the legislators to remember family-owned businesses when making decisions that may affect property taxes.

He said the past few sessions have been unfair to the business community.

“These people, too, are making an investment in our communities,” he said.

Christopher Shoff, 4th District Freeborn County commissioner and president of the Association of Minnesota Counties, said in 2006 and 2007 the average tillable acre of agriculture land in Freeborn County was assessed at $3,500. It has steadily increased so that this year it is assessed at $8,000 an acre.

Next year it is expected to decrease 10 percent.

He said he does not agree with the suggestion of taking a five-year average of farmland value to determine taxes because of unintended consequences.

Shoff said even with zero percent Freeborn County levy increases in 2013 and 2014, farmers saw an increase in their property taxes simply because of increasing land values.

Mower County’s levy increased by 7 percent this year, primarily due to state funding changes and rising expenses.

Freeborn County passed a 3.4 percent levy increase for 2015 to cover road projects that were bonded for.

Shoff also talked about county program aid and said the Association of Minnesota Counties is recommending a stabilization of the funding source.

In 2009, Freeborn County received $1.9 million in county program aid, but in 2015 the county will only receive $1.06 million. This amount is expected to decrease another 20 percent in 2016.

Add on top of that an estimated $4 million to $6 million deficit per year in funding simply to maintain the roads the county already has, he said.

He noted the commissioners approved a wheelage tax to support road projects, but that has only produced about $300,000 a year. The board is considering a sales tax to go toward these needs.

“Once again that’s just more local taxes as well,” Shoff said.

The listening session was hosted by District 27A Rep. Peggy Bennett, R-Albert Lea.

Bennett said what stuck out to her about the listening session were all of the farmers whose property taxes “have gone up horrendously.” She said there needs to be a way to be fair to these farmers and agricultural landowners.

“We’ve heard from so many good people in our communities,” Bennett said. “When we hear personal stories like this that’s what really matters.”

Committee Chairman Steve Drazkowski said he and others on the committee look to bring forward some ideas this session, and he encouraged people to share their thoughts on the proposals.

He said many of the concerns he heard Saturday he has heard in other rural areas around the state.

“We hear you loud and clear, and we’re looking to bring some solutions forward,” Drazkowski said.

The House DFL Caucus, in response to the listening session, said when Republicans last had the chance to lead the House they passed a budget that included drastic cuts to local government aid, county program aid and to the renter’s credit.

“Republicans have already laid out their priorities for this session — putting more tax breaks for businesses and corporations at the top of their list instead of middle class families, and voting against a motion to decrease big business spending and secret influence in state politics,” according to a House DFL information sheet.

The information stated during the last two years Democrats in the House made investments in property tax relief, including more funding for local government aid, county program aid and township aid and an additional $177 million in direct property tax relief for homeowners, renters and farmers.