1. School Facilities & Ag Land Taxes WEM SCHOOL DISTRICT A Fair er State Share Fred Nolan I Executive Director I March 31, 2016

2. Welcome – About MREA Voice of Greater Minnesota Education: –214 school districts –All 12 Education Districts –Service Coops & Spec Ed Coops –Many businesses and individuals Only organization in the state that brings together: –Teachers –Administrators –School Board/Community Members 2

3. Facility Fallout – Students’ Needs Many of today’s school facilities: –Older –In greater disrepair –Without access to needed technology Average school building in Minnesota is 40 years old. –50% built prior to the Digital Revolution –Oldest 25% range from 54-125 years old 3

4. In WEM… 5 Locations with average age of 62 3 over 60 years old 4 Location BuiltSq FtAge Waterville 193626,78080.00 Morristown 195427,16362.00 Waterville195438,01262.00 Morristown 19608,27256.00 Elysian 196424,59152.00 Waterville 197179,20845.00 Morristown198020,31036.00 Morristown 198786429.00 Waterville 199626420.00

5. Facility Fallout – Tax Need Debt Service, Net Tax Capacity Issues State share of school facility bond payments at historic low 2.5% 98% of bond debt service paid by local taxpayers Agriculture land values greatly impact ANTC (and seasonal rec) 43% gap in median household incomes rural to 7-county metro Rural bonds pass at less than ½ rate of metro in 2015 5

6. A Fairer State Share Current Picture 6 44 School Districts WEM and 287 more School Districts get 0% State Share Bond Payments All School Bonds 2016 Payments

7. Facility Fallout Ag2School 40% Ag Land Tax Credit Ag land is over 75% of TMV in 20% of districts (Brown) (after class rates and exclusions applied) Ag land is over 50% of TMV in one-third of districts 36% of Waterville-Elysian- Morristown TMV is in 2a, 2b, Ag land and 2d 7

8. A Fair State Share Ag Land Tax Credit Concept State sends a check to school for a percentage of taxes assessed on your property for school bonds County auditor sends you a bill for 100%-% of the credit Two credit proposals are in play at the Legislature. 8

9. 50% Credit: 100% State Dollars Bill:HF 848 Chief Author: Rep. Greg Davids Companion Bill: SF 826 – Limits increase only in the first year of new tax rate Chief Author: Sen. Rod Skoe 9 HF 848 Currently Income Tax Credit

10. A Fairer State Share 50% Farm Credit - HF 848 10

11. Total EMV (d) Current50% CreditReduction Ag Homestead $ 400,000$580$436($144) $150,000600,000811$551($260) House, Garage800,0001,042$667($375) 1 Acre1,000,0001,273$782($491) Per Acre EMV (d) Current50% CreditReduction Land Only $ 5,000$11.55$5.77($5.78) No house or garage 6,00013.85$6.93($6.92) Ag 7,00016.16$8.08($8.08) Non- Homestead 8,00018.47$9.24($9.23) 50% Credit Impact on WEM Proposal

12. Reflect and Share Reactions HF 848 As a farmer, district resident, state legislator: Positives of 50% Credit, 100% from state Negatives of 50% Credit, 100% from state What are the major themes of your conversations? 12

13. Why Ag2School Tax Equity Part 2 of Ag2School Solution 13 Farmers have little control over bond elections for schools. Ag2School Tax Equity functions like insurance. Reduces negative effort on profitability of tax credit. Farmer ‘skin in the game’ secures broader political support, staying power

14. How It Works Ag2School 40% Ag Land Tax Credit 40% credit for school bond taxes on 2a, 2b, Ag land and 2d Ag property –85% of cost of credit to come from state –15% of cost to come from farmers in statewide Ag land tax. $20 per $1 million in value $0.20 per acre for $10,000/acre EMV land $0.10 per acre for $5,000/acre EMV land $0.05 per acre for $2,500/acre EMV land HF 2122 (Kiel)/SF 1995 (Dahl) 14

15. A Fairer State Share Ag2School - 40% Credit, 15% ‘Co-Insurance’ 15 HF 2122 (Kiel)/ SF 1995 (Dahl )

16. Ag2School Impact in WEM 16 Total EMV (d) Current40% CreditReduction Ag Homestead $ 400,000$580$465($115) $150,000600,000811$603($208) House, Garage800,0001,042$742($300) 1 Acre1,000,0001,273$880($393) Per Acre EMV (d) CurrentAg2SchoolReduction Land Only $ 5,000$11.55$7.03($4.52) No house or garage 6,00013.85$8.43($5.42) Ag 7,00016.16$9.84($6.32) Non-Homestead 8,00018.47$11.24($7.23)

17. Effects of Ag2School Part 2 40% Ag Land Tax Credit Ag2School lowers farm taxes in 218 districts –From $277 to $800 per $1M value in 75 districts –From $150 to $276 per $1M value in 75 districts In 89 districts with no school bond debt, there is a small increase of $20 per $1M of Ag land State maintains its commitment regardless of future bond taxes and Ag land values –Because percentages (40/85/15) would be in statute 17

18. Districts Impacted by Ag2School 40% Ag Land Tax Credit: 85/15 split 18 Brown—Districts’ farmers receive the greatest reduction in school bond taxes $277-$800 per $1M Red--Districts’ farmers receive a moderate reduction in school bond taxes $150-$276 per $1M Gold---Districts’ farmers receive a modest reduction in school bond taxes $1 to $149 per $1M White—Districts with no debt. Farmers ‘contribute’ $20 per $1M for ‘co-insurance’ portion of Ag2School

19. Reflect and Share Reactions Ag2School Tax Credit As a farmer, district resident, state legislator: Positives of 40% Credit, 85% from state, 15% farmers Negatives of 40% Credit, 85% from state, 15% farmers What are the major themes of your conversations? 19

20. Does it make a difference? Reflect and Share: I support the WEM Proposal under current law I would support the WEM Proposal with HF 848, 50% credit, 100% State Funds I would support the WEM Proposal with Ag2School, 40% credit, 85/15 State/Farmers Split Fist to Five 20

21. Partnering on A Fairer State Share Tax Bill In Play: MREA Working with Farm groups (Corn Growers, Farm Bureau, Farmers Union, Agri- Growth) and SEE 50% Ag Credit is #1 In Alliance Platform Lobbied Governor’s office Meetings with Tax Chairs and Committee Staff Connect with Legislators Tempered with Rev Forecast 21 Place latest member map here from Working on behalf of our 214 school district members

22. Your Turn…Your Voice Become active today: –Write postcard to your legislators and legislative leaders –Send an email through your mobile device Stay updated and active in the future at mnrea.org Learn more-Download Guide http://mnrea.org/facilityfalloutguide/ 22

23. Writing Your Legislators Introduce yourself… –I am a WEM farmer. (resident, taxpayer) Introduce the issue…Fairer State Share –For WEM to pay 36% of school bond taxes in WEM is …. (unfair, unaffordable, too much) State desired action… –I urge you to support Rep. David’s 50% tax credit proposal (HF 848) because… or –I urge you to support MREA’s Ag2School 40% tax credit proposal (HF 2122/SF 1995) because… or –I recommend… Thank you, signature, phone number, return address 23

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