Minnesota's political leaders clashed Tuesday over whether budget measures passed this year by the DFL-led Legislature would reduce property taxes in 2014.
Gov. Mark Dayton held a news conference with his revenue commissioner and fellow Democratic-Farmer-Labor lawmakers to tout a projection showing property taxes would drop for the first time in a decade.
The Revenue Department says 2014 property tax revenue will be $121 million less than this year's estimated revenue due to DFL-backed increased aid to local governments, sales tax exemptions for cities and counties, and refunds to homeowners and renters.
Without those measures, Revenue Commissioner Myron Frans said, property tax revenue would have risen by an estimated $181 million.
At a news conference after Dayton's, Senate Minority Leader David Hann, R-Eden Prairie, said the administration's prediction was "complete bunk."
Local officials will decide what to do with the increased state aid, Hann said, and historically what they've done is spend it.
"I don't think there's any evidence to show that increasing local government aid has the effect that they're claiming, that that somehow translates into reduction of local taxes. It just doesn't work that way," Hann said.
He said the governor's projections "are about as reliable as the e-pulltab projections. They're coming from the same source."
Earlier, Dayton also poked fun at the wildly optimistic projections the state made last year about revenues from charitable gaming to support the new Minnesota Vikings stadium.
"I just want to make clear," he said, "the division of Revenue that makes these projections is different from the one that makes the charitable gaming, e-tab projections. I hope anyway."
Whether property taxes rise or fall will be known by early next year when the state has firmer numbers. But the uncertainty gave politicians the chance for a partisan wrangle in what's been a relatively quiet summer.
Republicans said the bottom line is Minnesotans at all income levels will pay higher taxes because of the DFL budget.
"Minnesotans are going to pay more because they increased taxes by $2.1 billion. It's pretty simple," said House Minority Leader Kurt Daudt, R-Crown.
Dayton said the budget passed in the spring raised taxes in other areas -- in particular, on incomes of the highest-paid Minnesotans -- to relieve pressure on property taxes, which he called "the most unfair tax."
His administration based its projection on an assumption that local leaders will pass along half of the state aid they get in the form of property tax relief and that more homeowners and renters will claim refunds designed to absorb some of their tax burden.
After grappling with stagnant or reduced state aid for years, many communities could opt to hire new police officers, tackle a backlog of road projects or pay off debt.
Those that can't make their money stretch enough could choose to raise tax levies, too.
But they will face an additional obstacle: The Legislature imposed limits on new taxes through local levies, but local leaders won't be notified of those precise caps until September.
Dayton said that even though it's up to local officials how they spend the extra state aid, he expects they'll be "delighted" to use it to reduce property taxes.
"They hear about it just as much as we do here," he said.
The property tax-reduction prediction is based on experience, Dayton said, and the analysis was done the same way it has been done for years by Revenue Department researchers who are "insulated from the political realm."
The report showed property tax revenue will rise an estimated $103 million in 2013 and rose $351 million in 2012.
In response to questions from the media about how close previous predictions have been to reality, Dayton said he would provide that data. Revenue officials said Tuesday the information would take some time to compile.
Also Tuesday, Dayton declined to say where he went or what company he was wooing on an out-of-state business development trip last week. He said companies sometimes want to talk privately, and he criticized the media for pressing him on it.
"Do you want us to go out there and try to get more jobs for people who don't have jobs in Minnesota or not? That becomes your moral responsibility as well as your professional journalistic responsibility," he said.
"If I'm going to have to disclose where I went in that kind of situation, it's going to cost me the opportunity to try to get jobs for Minnesota."
Dayton said "it's been disappointing to me how it's been blown out of, I think, the context that it should be in."
He declined to say how many jobs the company could potentially bring to the state or how often he personally travels to recruit businesses. He said that no financial incentives were offered to the company and that he expects there will be a decision one way or another within weeks.
Dayton's schedule shows he will make another out-of-state business development trip Wednesday, but an aide said it is to a different company in a different location.
This report includes information from the Associated Press. Doug Belden can be reached at 651-228-5136. Follow him at twitter.com/dbeldenpipress.
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