Minn. bill would remove property tax cap

(AP) - - Legislation advancing in the Minnesota Senate would let cities and counties raise property tax levies without state interference, published notices in newspapers or annual hearings where taxpayers vent their frustrations.

Senate Taxes Committee Chairman Tom Bakk said extra state aid was supposed to help local governments cope with levy limits, but the money has dried up with the meltdown. He said Democrats held out for the aid as part of last year's budget deal with Gov. Tim Pawlenty.

Instead, the GOP governor cut payments to cities and counties in December and proposed more cuts in the coming budget cycle. The state faces a $4.6 billion deficit through mid-2011.

"The deal's been broken," said Bakk, DFL-Cook.

Bakk's bill would nix "truth in taxation" hearings late in the year, annual meetings where taxing authorities present their budgets and taxpayers react and ask questions.

"Property taxes are our only tool. ... that we use prudently and responsibly."

Bakk said the meetings are costly but don't always draw crowds. He suggested that governments could let the public weigh in at their regular meetings instead.

Local officials including Apple Valley Mayor Mary Hamann-Roland, who heads the League of Minnesota Cities, said many cities would continue holding the taxation hearings even if they weren't required.

But Senate Minority Leader Dave Senjem, a former Rochester City Council member, questioned how many years that would last if the state mandate goes away.

"We have a culture here of at least annual participation by citizens in our government," said Senjem, R-Rochester. "I fear we'll lose that."

The committee approved Bakk's bill after voting to give local governments a two-year break from a requirement to advertise tax changes and public hearings in local newspapers.

"Anybody affected is getting a notice in the mail," said DFL Senate Majority Leader Larry Pogemiller, who made the proposal.

Local officials said they are bracing for levy limits to clamp down on them harder than anticipated this year and next.

A provision tied to inflation would hold levy increases to about 1 percent or less, instead of a 3.9 percent limit discussed widely last year.

"Property taxes are our only tool," said Eagan Mayor Mike Maguire. "They are limited, but they are a tool that we use prudently and responsibly."

The bill's next stop is the Senate Rules and Administration Committee.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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