MN – Dayton pushes to repeal farm equipment repair tax

Minnesota Gov. Mark Dayton told producers at Farmfest earlier this month that he favors repealing a much-criticized new sales tax on farm equipment repair in a special session of the state Legislature on Sept. 9.

Much of the session will be devoted to dealing mostly with a state match for federal disaster aid needed to repair damage from storms that raked southern Minnesota in June.

Dayton said the machinery tax repeal is the only other issue he would like discussed in the one-day session, adding that he would like to see the tax refunded retroactive to Aug. 1.

He later told farm reporters that the producer tax was in a huge budget bill and he didn’t even know it was in the legislation. “It surfaced in the last minute of the last night, and no one even wants to take responsibility for (putting it in the tax bill).”

Dayton talked about good will toward farmers from both parties in the Legislature who know that the farm economy is a key to Minnesota’s fortunes. He also noted that another reason for the bipartisanship on farm policy in Minnesota is because farmland covers about half the state and Commission of Agriculture Dave Frederickson has respect from both sides of the aisle.

“You’ve always been a bedrock of our state’s economy and will continue to be so,” he told producers.

The governor, who plans to seek re-election next year and has Republican opponents lining up against him, said “the rest of Minnesota depends on you, and your life depends on the rest of the state.”

He said the state’s economy, in a recovery mode, has eliminated a deficit that was at $6.2 billion in 2011 and is paying back schools that were owed $2 billion from other budget years when payments were delayed. About $2 billion in permanent state government cuts also have been made.

He said the state isn’t out of its financial hole, but daylight is there, and that is good news for farmers, too. He credited farmers with helping the state recover in recent years with their hard work and increasing incomes.

Later, Dayton’s commissioner of revenue, Myron Frans, told reporters that despite increasing farmland values, many farmers are going to see reductions in property taxes next year. He said the reason is that the Legislature this year increased local government aid and tax credits and set levy limits.

Because of the combination of those factors, Frans said they are expecting a 1.5 percent decrease or $121 million in property taxes next year statewide.

Dayton said if the economy keeps heading in a positive direction, the state would be looking at a projected surplus, and when schools get all of the money they are owed, his first step would be to cut property taxes more.

He said property taxes have increased 86 percent in the previous 10 years.

In a response to a question, Frans said the Legislature also raised the exemption for the state inheritance tax from $1 million to $3 million, which should help farmers passing on farm operations to their families. The federal exemption is $5 million.

Dayton was asked by a reporter why he didn’t mention his increased income tax on couples making more than $250,000 during his Farmfest address. The tax is likely to affect many farmers who have been enjoying increasing incomes with higher commodity prices and larger operations.

The governor responded that he doesn’t care how much money anyone makes, but that those in the top 2 percent of earners should pay more to help the state invest in K-12, higher education and other areas to boost the workforce and improve the state.

He said if the state hadn’t had a deficit and didn’t owe the schools money, “we wouldn’t have had to raise anybody’s taxes.”