191016 opp news farm credit

Superintendent Jeff Elstad (left), Rep. John Petersburg (center) and Sen. John Jasinski held a press conference Oct. 15 to discuss a recent increase to the statewide farm tax credit, which assists agricultural landowners with their share of school building bonds. (Bridget Kranz/People’s Press)

OWATONNA — School district officials and state legislators held a press conference Tuesday to discuss a recently increased tax credit that would subsidize farmers’ contributions to school building bonds, including the soon-to-be-voted-on Owatonna High School building bond.

Passed in the state Legislature shortly after a previous $116 million building bond referendum failed on the local ballot in May, “Ag2School” funding from the state will now gradually increase farmers’ credits for school building bonds from 40% to 70% in the coming years. This increase, available on all agricultural land excluding the house, garage and surrounding acre, will try to get farmers’ share of school building bonds closer to their share of district operating levies.

“Years ago, the operating levy as well as operating levy referendums and overrides got moved to only being charged on agricultural land for the building site and one acre,” said Rep. John Petersburg, who represents District 24A, which includes Owatonna. “However, the building referendums and overrides for that, there just wasn’t enough money in the budget back in those days to include that.”

While farmers will still be taxed on all of their land for building bonds, they will soon only be charged at a rate of 30%, with money from the state’s general fund going to cover the remainder. The credit will ramp up slowly each year, going from 40% currently to 50% next year to its cap at 70% in 2023.

At the conference, legislators and Superintendent Jeff Elstad expressed their hope that this new measure would create a more fair funding system for school construction projects by reducing the property tax burden on agricultural landowners.

“There’s a dichotomy that’s been created where most metro area bond referendums are successful,” said Elstad. “One of the factors is that they have a larger tax capacity. Also, one of the factors is that they don’t have much agricultural land. [Bonds] obviously have an impact on our farmers and agricultural land owners.”

At the conference, Sen. John Jasinski, R-Faribault, whose district includes most of Steele County, said he hoped the new credits would help get rural facilities on par with those in the metro, and provide an incentive for Minnesotans to move to out-state areas.

“We need that stuff out here to keep the population distributed across the state and not get it all consolidated in the metro, because obviously you see what it does to traffic and things like that,” said Jasinski.

Both current and future building bonds will be impacted by the new credit, the money for which is coming directly from the state’s general fund. If the $104 million referendum passes next month, taxes will start being collected on it in 2021, according to Elstad. By that time, the farm credit will have increased to 55%.

For now, this means that in 2021 farmers would be paying roughly $5 an acre annually for both previously-approved school building bonds and the 2019 proposal. When the full 70% tax credit goes into effect in 2023, farmers would be paying around $3.40 per acre.

Amanda Heilman, director of finance and operations for Owatonna Public Schools, estimates that this rate will continue through 2045, when all current and proposed bonds will have been paid off.

“From 2017 to 2023, even with the new bond proposed, [agricultural landowners] are going to see their taxes drop $3.83 an acre on their property,” Elstad said in an interview, of the amount farmers are paying for existing and proposed school building bonds.

At the conference, Jasinski spoke not only in favor of the tax credit, but of the proposed new Owatonna High School, as well. He said that he thought the facility would help prepare students for careers in the technical trades.

In an interview, Elstad noted that workforce development was a priority for the district in pushing for the new space.

“Our vision around the new high school and the design of the new high school is really tailored around our career pathways efforts,” he said. “Our current facility is limited in what we can offer, not only in terms of space but also because of antiquated learning facilities.”

Elstad said that the new space would likely include rooms where students could work with professional equipment with separate spaces for instruction and application.

Petersburg also expressed his support for the new high school. “I think the facilities that they have currently are getting more and more difficult to maintain and provide a 21st century education, so it’s time to consider that,” he said, in an interview.

The Owatonna People’s Press reported back in May that residents at the Clinton Falls polling place – a station set up for those who live outside the city but within the district – voted overwhelmingly against that bond, with nearly 75% of respondents voting “no.”

With the last referendum having failed by less than one percentage point, it remains to be seen whether this newly-increased tax credit will impact the November outcome.

Reach Reporter Bridget Kranz at 507-444-2376.

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