Ag land tax credit coming in 2018

FAIRMONT — Minnesota schools face several challenges when it comes to providing taxpayer funded education.

Not only is technology constantly in flux, but there are increased security and safety concerns, and the fact remains that many school buildings are older and in need of repair. New facilities and major repairs cost quite a bit, and most districts obtain funding for these projects through school bonds.

But in a largely ag-based economy, that means Minnesota farmers end up doing a lot of heavy lifting. However, there appears to be relief on the horizon. A new tax credit, dubbed the Ag2school tax credit, has been passed by the Minnesota Legislature. Martin County Auditor Jim Forshee was available to discuss the credit and what it means for farmers.

“We just got an email from the state on all the new laws that have come in and it will go into effect in 2018,” said Forshee, who passed the explanation of the bill over to County Assessor Dan Whitman.

“What it is, it’s a credit to agricultural land for school building bonds, so that a portion of taxes that goes to support a school’s building bond will now be taken off from agricultural land,” he said. “So the ag land won’t have to pay all of the school building bond, now they’ll get 40 percent of that taken off and they won’t have to pay it. Then that money gets reimbursed to the school through the state general fund.”

According to Whitman, this means that public schools will not see any loss while at the same time the state provides relief to agricultural land owners. However, Forshee made it clear that the tax credit affects agricultural land only and will not affect the residential portion of a farm’s property.

“If I understand it right, the land that they’ve got their house on will still be taxed the same, but the ag land itself will not,” he said.

“The house, the garage and one acre of land will still be treated like every other residential property in the county, which will still go toward the bond, but the ag land is not going to have to pay that portion of it,” Whitman said.

According to information on the Minnesota Rural Education Association website, the credit will accomplish several things, including providing a credit for all existing and future local school district debt levies, and delivering $40 million in tax relief in 2018. That includes more than $225,000 aggregate relief each in 68 school districts and more than $100,000 aggregated relief in another 79 school districts.

The credit also will account for rising ag land values that still had a historic high median sale price of $4,611 in 2015. The average price per acre for ag land in Minnesota has increased 719 percent since 1990, from $705 per acre to $5,071 in 2013.

The site goes on to state that local taxpayers contribute 97 percent to 100 percent to build and remodel educational facilities, while the state contributes at most 3 percent, which supports only 44 school districts and leaves all other districts 100 percent dependent on local tax support for their facilities. With that in mind, it would seem the Ag2school credit will provide much need relief to rural farmers.

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