Bill would help MN school districts in areas with lots of vacation homes

ST. PAUL — Some Northern Minnesota lawmakers want to shift tax dollars paid on seasonal recreational homes that currently go to the state’s general fund to help school districts in the communities where the properties are located.

The change wouldn’t increase or decrease taxes for anyone but instead would allow school districts with a high number of seasonal recreational properties to keep tax dollars in their own school districts, said one of the bill’s authors, Sen. Grant Hauschild, DFL-Hermantown.

Additionally, the school districts could pull from the general fund if needed to help provide equity for their areas, Hauschild said.

Instead of one large immediate transfer from the general fund into the districts, this bill would allow school districts to vote on levies and receive necessary funds over time. Supporters say the transfer would cost about $8 million over each of the next two years.

Hauschild said that would be particularly helpful in districts like his, where a lot of tax dollars are going into the general fund instead of staying in school districts.

“It’s making the case that the wealthiest in our school districts should pay into the operating levy for schools in those areas,” Hauschild said. “The only losers are people that would prefer we spend the general fund on other things.”

Before 2001, seasonal properties were taxed for local school operating levies. But because of a change made by the Legislature and governor that year, the taxes began going to a single fund disbursed to school districts across the state. Another change created the current system, with seasonal home taxes going into the state’s general fund.

The system has left as many as 92 school districts finding it very difficult to pass operating levies, because their other property taxpayers don't feel as though they can support additional taxes.

That hurts smaller districts, Hauschild said, especially ones with a large number of seasonal recreational homes compared to permanent residents. He said it means school districts are sending a lot of money to the general fund but having a harder time passing operating levies to bring money back in for the local schools.

“It’s back to that equity argument,” Hauschild said, “for our school districts that have high seasonal recreation properties and can’t afford these levies to make it so that those homes are paying into their local districts.”

Co-sponsors of the bill include Republican Sens. Robert Farnsworth of Hibbing, Jordan Rasmusson of Fergus Falls and Justin Eichorn of Grand Rapids, and Sen. Robert Kupec, DFL-Moorhead.

Similar legislation was introduced last year, but didn’t pass by the end of the session. A similar bipartisan bill was introduced in the House Wednesday. Neither have been scheduled for a hearing.

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