Providing a non-partisan model for generating and sharing          

    essential information on public issues and proposed solutions              

10th Anniversary :  2005- 06 to 2015-16

   
                                                                                                  About Civic Caucus   l   Interviews & Responses  l   Position Reports   l   Contact Us   l   Home  

 
 Response Page - Gilje  Interview -      


These comments are responses to the questions listed below,
which were generated in regard to the
Paul Gilje Interview of
10-12-2012.
 

OVERVIEW

Paul Gilje, former Citizens League research director and now Civic Caucus coordinator, describes the evolution of the 1971 Metropolitan Tax-Base Sharing Law and the effects of its implementation. He contends that the law has effectively functioned as a tax-base insurance policy, assuring a share of metro-wide tax-base growth for all communities in the seven-county metro area, irrespective of where in the area the growth occurs. He sees recent proposals to limit or abolish the law as detrimental to the long-term financial stability of the metropolitan area.

For the complete interview summary see:  http://bit.ly/PgLXmv

Response Summary:  Readers have been asked to rate, on a scale of (0) most disagreement, to (5) neutral, to (10) most agreement, the following points discussed by Paul Gilje. Average response ratings shown below are simply the mean of all readers’ zero-to-ten responses to the ideas proposed and should not be considered an accurate reflection of a scientifically structured poll.

1. Goal remains valid. (8.8 average response) A major goal of the metro area tax-base sharing law in 1971, to reduce the winner-take-all reward in inter-municipal competition for tax base, remains valid today.

2. Law assures share of growth. (8.9 average response) The law functions as a property tax insurance policy for everyone in the metro area: no matter where you live in the metro area, you share in the region's commercial-industrial growth, wherever it occurs.

3. Differences narrowed partially. (8.2 average response) Under the law differences in per capita commercial-industrial tax base are narrowed, gradually, partially, but not radically. Wealthiest cities in per capital commercial-industrial value remain on top and the poorest, on the bottom.

4. Omit residential value. (7.3 average response) To preserve accountability for setting tax

levies, residential value shouldn't be subject to sharing.

5. Keep shared base at 40%. (8.7 average response) The percentage of commercial-industrial property subject to sharing (40 percent) should not be reduced.

6. Keep retail in shared base. (8.2 average response) Proposals to exempt retail businesses from tax-base sharing should be rejected.

7. Repeal tax-base sharing. (1.7 average response) Cities in the metro area shouldn't have to share any tax base.  The law should be repealed.

 

Response Distribution:

Strongly disagree

Moderately disagree

Neutral

Moderately agree

Strongly agree

Total Responses

1. Goal remains valid.

3%

6%

0%

23%

68%

31

2. Law assures share of growth.

3%

0%

3%

30%

63%

30

3. Differences narrowed partially.

0%

7%

3%

50%

40%

30

4. Omit residential value.

6%

6%

19%

26%

42%

31

5. Keep shared base at 40%.

0%

7%

3%

33%

57%

30

6. Keep retail in shared base.

3%

10%

3%

32%

52%

31

7. Repeal tax-base sharing.

65%

19%

3%

3%

10%

31

Individual Responses:

Bert LeMunyon  (10)  (10)  (10)  (10)  (7.5)  (7.5)  (0)

Ray Ayotte  (10)  (10)  (10)  (10)  (10)  (10)  (10)

Craig L. Ebeling  (2.5)  (7.5)  (7.5)  (10)  (2.5)  (7.5)  (5)

1. Goal remains valid. I have heard about the concerns of cutthroat competition between communities for attracting new commercial industrial development, and that one of the goals of the legislation is to prevent this. I just haven't seen this phenomenon occurring in my 25 years of practical experience. We have steadily tried to attract industrial development for the jobs aspect. We have been a "loser" for so many years it just sort of wears on you. Maybe since we are now losing less and we may actually be a winner some day we should support the status quo.  I know this; in seeking out industrial development, fiscal disparities and tax rates are NOT a major consideration for us or for the companies we are recruiting.

7. Repeal tax-base sharing. See comments on Question 1. I can't argue that some of the concepts aren't valid. Part of the concern for the traditional losers is the difficult budget situations we find ourselves in. The losses that we experience even now are still a significant issue for us. And as noted above, we have been a contributor to the fund ever since it was created. It just seems like maybe there should be an end to it, although that might not be in our best interest since it is conceivable that we could be a winner at some point in the future.

Scott Halstead  (10)  (10)  (10)  (10)  (10)  (10)  (10)

7. Repeal tax-base sharing. This was a remarkable program that has stood the test of time.  Political leaders, keep your hands off.  If anything the geographical area should be enlarged beyond 7 counties.

Ken Smart  (0)  (0)  (2.5)  (10)  (10)  (0)  (10)

1. Goal remains valid. Competition would be far better to ensure desired government services are delivered cost effectively.

Chris Brazelton  (10)  (10)  (10)  (10)  (10)  (10)  (0)

1. Goal remains valid. Wright County not involved in this. Delano area lost possible Target store because it would have been built on the Hennepin County side and (there would have been) no tax base sharing to cover ongoing costs to Wright County and City of Delano.  Road and water line, etc., costs impacted the nearest City, but that City and County did not get the tax benefit.

6. Keep retail in shared base. Customers of retail do not come exclusively from the city or county that hosts the outlet.

Jack Evert  (10)  (10)  (7.5)  (5)  (7.5)  (7.5)  (0)

1. Goal remains valid. It is really unusual to see the long-term results from an innovative tax policy such as this.  And perhaps even more unusual to see that the policy worked as intended.  I would hate to see it tampered with because of some short-term concerns about perceived inequities.  Changing the terminology on the tax statements to be more reflective of the actual situation is a very good idea.

4. Omit residential value. Some communities have much higher valued housing.  Perhaps housing should be placed in the pool as well.

5. Keep shared base at 40%. It has worked, so let's keep it.

6. Keep retail in shared base. See above.

John Watson Milton  (10)  (10)  (5)  (0)  (10)  (10)  (0)

7. Repeal tax-base sharing. Thank God we had bipartisan government in the 1970s! I can only hope that if the Republicans keep control in the Legislature, we'll not lose this fine piece of legislation.

R. C. Angevine  (10)  (10)  (10)  (10)  (7.5)  (10)  (0)

Don Anderson  (7.5)  (10)  (10)  (10)  (7.5)  (5)  (0)

Dave Broden  (10)  (10)  (7.5)  (0)  (10)  (10)  (0)

1. Goal remains valid. The 1971 legislation has had a significant positive impact on the metro landscape of quality of services and capability and balances resources effectively with needs and benefits without penalty to either side.

2. Law assures share of growth. See answer to #1. Growth is shared by all the citizens and communities.

3. Differences narrowed partially. The effect is positive, in many ways. I would not refer to the poorest or bottom but rather those will less tax base assets and yet providing the manpower for the economy of the region and supporting quality of life and quality education and public safety. Refer to the poorest as helping those with fewer assets to realize the capabilities of others.

4. Omit residential value. Both residential and commercial should be shared to ensure a balance.

5. Keep shared base at 40%. The percentage should remain constant but some form of adjustment due to specific high value commercial industrial growth may be appropriate. Objective review and adjustment of this type of law is beneficial to ensure equality and continuation of the basic purpose and areas developed.

6. Keep retail in shared base. Retail should remain and be included due to variation in quality of retail and distribution of retail.

7. Repeal tax-base sharing. The current law has been a plus for the evolving development and quality of development and capability in the metro area. To move away from a shared base would foster varying pockets of quality of services, resources, capability etc.

Stephen Alderson  (10)  (10)  (2.5)  (5)  (5)  (10)  (0)

Hans Sandbo  (7.5)  (7.5)  (7.5)  (5)  (7.5)  (7.5)  (0)

1. Goal remains valid. If it has worked this long, keep it up but keep evaluating the effectiveness.   The details of it are beyond me, but I respect Paul Gilje and his assessment.  Death and taxes are inevitable.  But we do not need or want to be taxed to death.

Kathy Tingelstad  (10)  (7.5)  (7.5)  (7.5)  (10)  (10)  (0)

6. Keep retail in shared base. Remember to look at the impact not only to cities, but also to counties and school districts. Also, there is no statutory definition concerning "retail."

Dan McElroy  (7.5)  (7.5)  (7.5)  (10)  (7.5)  (2.5)  (2.5)

1. Goal remains valid. We still see cities using Tax Increment Financing and other tools to attract development, including retail, which would occur in the region anyway.

2. Law assures share of growth. One problem with the law is that it doesn't recognize the costs of serving large daytime populations.  Cities with low Commercial/Industrial values may get Local Government Aid not available to high C/I value cities and not have the costs of police, fire, EMS, traffic control, streets, bridges, etc., that come with commercial activity.

6. Keep retail in shared base. Retail imposes more service costs than office or manufacturing uses.

7. Repeal tax-base sharing. There are some changes that would be good public policy, particularly around local government aid and the costs of providing services.  Repeal isn't a good idea.

Vici Oshiro  (10)  (10)  (10)  (10)  (10)  (10)  (0)

7. Repeal tax-base sharing. I wonder if Warren Preeshl is watching.

Robert J. Brown  (10)  (10)  (10)  (5)  (10)  (10)  (0)

First, I think the law has worked well. Some communities have moved from being winners to losers or the reverse. I seem to recall Burnsville suing because they thought they were being taken advantage of by being forced to share the tax wealth of the Blackdog plant, but within a few years Burnsville became a recipient of the benefits of the law as their tax base did not grow.

Second, I have mixed feeling about residential property being exempt from tax sharing. As I drove down the Mississippi River Road today I noticed many homes that have more value than many small business commercial properties.

Third, I have always been concerned about the fact that overall tax burdens are not calculated and considered in establishing public policies. We have a somewhat progressive state income tax, exemptions (food, drugs, clothing) from the state sales tax, and some different rates and credits in determining property taxes. At the same time we have school taxes which try to equalize funding. What is the overall effect on a community or on an individual by this complex of collecting taxes and distributing benefits? Do we ever over-equalize?

Tim Hall  (na)  (na)  (na)  (na)  (na)  (na)  (na)

I think you are referring to the Minnesota miracle. It has caused property taxes to go up without much oversight. Our school districts are currently consolidating administration cost, but they are doing it so less people can make more money. They are not doing it to bring down taxes. About 6000 dollars a student goes to administration cost. One way I can see to bring cost is to fire all the administrators above principle and bring in a private company. With this common goal I can see voters in North Minneapolis and Wayzata working towards one common goal. Trying to put it back to the way it was would leave us fighting with each other while our taxes go up, and jobs are being driven from our State.

Bright Dornblaser  (10)  (10)  (10)  (10)  (10)  (10)  (0)

Chuck Lutz  (10)  (10)  (9)  (5)  (na)  (10)  (0)

Chuck Slocum  (na)  (na)  (na)  (na)  (na)  (na)  (na)

Thanks for this report. I am amazed that commercial/industrial property tax sharing in the metro is as equal as it is.

Tony Scallon  (10)  (9)  (6)  (1)  (10)  (10)  (0)

This is a very important policy.  The Metropolitan area needs to retain the policy

John Nowicki  (na)  (na)  (na)  (na)  (na)  (na)  (na)

Why not do this statewide? Seven counties seems irrelevant today.

Larry Schluter  (9)  (9)  (8)  (3)  (7)  (8)  (0)

Cities that do not allow for any commercial development should not be part of the revenue sharing. 

Lyall Schwarzkopf  (9)  (8)  (9)  (8)  (9)  (9)  (1)

Al Quie  (10)  (10)  (10)  (10)  (10)  (10)  (0)

Carolyn Ring  (10)  (10)  (8)  (8)  (10)  (8)  (0)

If it's not broke, don't fix it.

Clarence Shallbetter  (10)  (na)  (na)  (7)  (9)  (9)  (0)

Tax base sharing is one of the most ingenious ideas ever proposed and advanced by the Citizens League. It recognized the fact that the Twin Cites area is one economic region in which at least 40 percent of the commercial/industrial growth occurs while yet rewarding the local community that may have partially assisted in attracting the development with 60 percent of this growth for their tax base to help pay for infrastructure and services needed by the new development.

Paul Hauge  (9)  (9)  (9)  (8)  (10)  (9)  (1)

(The) fiscal disparities (law) has worked well for many and was the result of farsighted people who innovated a plan that could work throughout the country, if it has not already done so.

Wayne Jennings  (10)  (10)  (7)  (8)  (10)  (10)  (1)

Very clear explanation of the program and its merits. Thank you.

Roy Thompson  (7)  (7)  (7)  (9)  (9)  (9)  (3)

Tom Spitznagle  (3)  (5)  (7)  (10)  (4)  (3)  (8)

After investing hundreds of hours studying Minnesota’s property tax system, it is crystal clear to me that it is an overly complicated system too often used as a smokescreen for politicians interested in providing favorable tax treatment to unique groups of constituents and supporters at the expense of other property owners.  Minnesota’s property tax system is clearly a significant outlier compared to the property tax systems of the other 49 states.  Minnesota Department of Revenue analyses and data clearly support this fact.  

Having said that, I haven’t studied fiscal disparities in any real detail, but I’ll offer some high-level observations that may or may not be entirely accurate but fall into the “I wonder” category:  1) Fiscal disparities appears to be well-intentioned, but providing subsidies to some communities at the expense of others could have the effect of diminishing the incentive for those benefitting communities to take steps to enhance their own tax bases and eventually raise their own tax revenues.  2) For example, Minneapolis has benefitted from fiscal disparities but, at the same time, over the past 40+ years entire large sections of the city have deteriorated in terms of both tax base and quality of life measures such as safety and public school education.  This has put increasing pressure on the stronger sections of Minneapolis to bear an ever-increasing portion of the city’s total property tax revenue.

Tom Swain  (10)  (10)  (10)  (8)  (10)  (10)  (0)

 Great law. Great report. Great article on Paul.

John Adams  (10)  (10)  (10)  (5)  (10)  (1)  (1)

I've always been a great fan of this law. 

4. Omit residential value. I would like to see a discussion and analysis of this point.  Every study I've seen on residential property values points out how subsidies to home owners (deductibility of mortgage loan interest; deductibility of property taxes, plus about 5 other major subsidies) end up being capitalized into residential property values with the large majority of those higher incremental values going to the upper-income/upper-wealth households and their communities.  On this basis alone, there is no good justification for leaving residential property values out of the fiscal disparities formula--although adding them will never happen.

6. Keep retail in shared base. The value of retail businesses and the real estate that they occupy are direct reflections of the community income and community wealth that surrounds them.  There is no good reason to exclude them. 

    

The Civic Caucus   is a non-partisan, tax-exempt educational organization.   The Core participants include persons of varying political persuasions, reflecting years of leadership in politics and business. Click here  to see a short personal background of each.

   Verne C. Johnson, chair;  David Broden, Charles Clay,  Bill Frenzel, Paul Gilje,  Jim Hetland,  Marina Lyon,
Joe Mansky,  John Mooty,  Jim Olson,  and  Wayne Popham 


©
The Civic Caucus, 01-01-2008
2104 Girard Avenue South, Minneapolis, MN 55405.  civiccaucus@comcast.net
Verne C. Johnson, chair, 952-835-4549,       Paul A. Gilje, coordinator, 952-890-5220.

contact webmaster
 

 

 

Hit Counter