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The bill appears to provide direct property tax refund to homeowners rather than reinstituting the former homestead credit program.
(Published Feb 27, 2013)
On Tuesday evening, the House Property and Local Tax Division considered HF 2, a bill authored by committee chair Jim Davnie (DFL-Minneapolis) and co-authored by 34 other members. It appears that the House will use this bill as the mechanism to provide property tax relief to homeowners rather than the governor’s $500 property tax rebate or reinstituting the former homestead credit program.
Under the bill, the existing homeowner property tax refund program (PTR) would be expanded and renamed the “Homestead Credit Refund” program. The bill would require the Minnesota Department of Revenue to notify potentially eligible homeowners. The bill would also expand the renters’ refund program.
According to the estimates prepared by the Minnesota Department of Revenue, the expansion of refund program will cost the state an additional $92 million in the first year of implementation. In addition, the Department estimates that only about two-thirds of eligible homeowners are currently filing for the property tax refund. The Department estimates that the notification of eligible homeowners could result in an additional $74 million of refunds in the first year. The expansion of the renters’ refund would cost approximately $15 million in the first year.
League policies support using mechanisms that provide state property tax relief directly to property owners as opposed to past systems that provided a credit to homeowners and then reimburse cities, counties and school districts for the lost revenue (see FF-8, page 90, in 2013 City Policies). In the past, the state has cut these reimbursements to balance its budget.
The bill was laid over for possible inclusion in the omnibus tax bill.
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