Ag2School tax credit helps farmers, schools
By: Sen. Rich Draheim

Note: this column originally ran in the Northfield News

With the upcoming school bond referendum in Northfield, I have been asked by many constituents about the impact of increased taxes on farmers in our area. Historically, farmers have been asked to disproportionately share in contributing property taxes for referendums. Since 1990, agricultural land prices have increased from $705 per acre to $5,071 in 2013, an increase of over 700 percent. As property taxes are based on the value of the property, the increase in farmland value has increased farmer’s tax burdens, especially regarding school referendums. According to the Minnesota Farm Bureau, in some highly agricultural school districts, farmers have paid up to ten times more than other residents. Unsurprisingly, school bond referendums have not fared well in Greater Minnesota. In 2015-16, only 41 percent of Greater Minnesota school referendums passed, compared to an 81 percent success rate in the metro.

However, school facilities in Greater Minnesota have not stopped aging. In school districts that have over 75 percent of their tax revenue generated by farmland, the school facilities are 51 years old on average, 11 years older than the Minnesota state average and close to the average life expectancy for school buildings of 60 years.

Obviously, this system did not work for farmers, students, nor our Greater Minnesota communities. This last legislative session, we prioritized a bipartisan solution to the problem: the Ag2School property tax credit.

Specifically, the Ag2School property tax credit awards farmers up to a 40 percent tax credit on their agricultural land to help offset the costs of school bond referendums. Beginning January 1, farmers will receive a 40 percent tax credit on their share of a school referendum in their district. This applies to both current and future referendums. For example, a farmer who paid $100 per acre in taxes for a school bond will receive a $40 credit from the State of Minnesota on their property tax bill. This impacts an estimated 240,000 parcels statewide, accounting for $40 million in tax relief for Minnesotans in 2018. In the Northfield Public Schools district alone, the aggregate tax savings will be just under $300,000.

The result is clear: farmers will now pay their fair share and Greater Minnesota school districts will have a better opportunity to improve the quality of education in our state. While I encourage all voters to research ballot measures and inform themselves before election day, the Ag2School tax credit will allow for farmers to focus less on their increased tax bill and more on the value of the school referendum itself. That is a win-win for all.