Quick Hits 03-04-2011

Corporate Income Taxes vs Property Tax

A recent Greater Minnesota Advocate posting showed that Minnesota corporations pay four times more in property taxes than they do in corporate income taxes to the state.  Several proposals in the Legislature would reduce to the corporate income tax rate while cutting other would cut Local Government Aid (LGA), which affects property taxes.  Our premise for some time has been that LGA is a business development program.  Property taxes are a much larger burden to businesses than the corporate income tax.  LGA keeps property taxes down.

If Minnesota eliminated LGA

Rep. Ann Lenczewski (DFL – Bloomington) recently present HF 398, which would effectively eliminate all state aids and credits including LGA, county aid, and some agricultural credits. Lenczewski introduced the bill largely as an education piece simply to underscore the impacts of such a move.  Greater Minnesota property taxes as a whole would have to increase by 17.6 percent.  Residential properties would feel the brunt as those taxes would increase by 28.2 percent.  Metro area taxes would increase by 5.2 percent.  According to the Coalition of Greater Minnesota Cities, “On top of the property tax increases, cities would have to make severe service reductions. The property tax estimates were based on 50% of all aid lost to a city being levied back until the levy increase is 10%, at which point 30% of the remaining aid lost would be levied back. Under these estimates, many cities in greater Minnesota would see large percentage of their aid reduction in
service cuts.”

Strong Towns Blog

I haven’t proclaimed my unambiguous public affairs love with the folks at Strong Towns for at least a month now.  So, it’s time for another shout out.  One recent column discussed how city planning variance authority generally detracts, rather than adds to sustainable, planned, neighborhoods.  Another post was about the unsustainable, unaffordable, development of wide streets (like we have in abundance here in EGF) and how such wide streets relate to public safety.  What I love best about the guys at Strong Towns is their political diversity.  One of the partners in the non-profit is a liberal Democrat; and the other is a card-carrying Republican.  Strong Towns continues to show how sustainable development is not only environmentally conscious, but it also makes fiscal sense for the taxpayer.

Public Sector Compensation in Brief

I’ve wrote several blog posts already on public sector compensation.  The latest study, released on Thursday from the Economic Policy Institute repeats many of the refrains that have become staples in the ongoing debate.  The primary findings are that public sector employees are generally not overcompensated when adjusting for education and experience.  Non-wage factors such as insurance and pensions are becoming an increasing portion of overall public sector compensation packages, which is why those items often receive much political attention.

Big Surprise

As MPR reports, the recently-released State Auditor report shows tht City’s spent less in the last decade even as property taxes rose due to declining state and federal aid programs.