Response To "Tax Break Could Hurt Martin County" Published In The Fairmont Sentinel

Fairmont Sentinel

Feb 26, 2014

On Feb 13, the Fairmont Sentinel published a story, "Tax Break Could Hurt Martin County," which suggested a proposed tax exemption on ethanol production tanks would result in a loss of revenue for Martin County.

Below is our response, which was published by the newspaper on Feb 26.

We would like to bring to your attention several inaccuracies in the article "Tax break could hurt Martin County," published in the Sentinel on Feb. 13.

The report by the Minnesota Department of Revenue that is cited in the story, "Report and Study on Business Production Property," recommends legislative action to clarify a narrow set of tax classification issues and provide uniformity and certainty in tax classification across counties in Minnesota. Such tax matters rightly fall to the Legislature.

With regard to the proposal to make production tanks tax-exempt, Martin County Commissioner Dan Schmidtke said, as quoted in the story, "It was supposed to protect smaller private distilleries," which implies that the proposed tax exemption is based on the size of a business.

It has to be noted that the size of a business is not a factor in Minnesota law and subjective classification on business sizes for a tax exemption on production tanks runs counter to the guidance in the Minnesota Association of Assessing Officers 2009 revised Cost Schedule.

Martin County Assessor Dan Whitman was quoted in the story as saying: "Right now, one of them has $331,000 in taxes, and if fully taxable would be $851,000. But if this were to pass, there would be a $256,000 exemption on each plant. That would be half a million in taxes that wouldn't be paid. That means the rest of the county would have to make up for that; it would shift the tax burden to all other property in the county."

This seems to imply that Martin County would lose tax revenues from its two ethanol plants once enrollment in the JOBZ plan expires and that lost revenue would have to be made up by shifting taxes elsewhere.

This statement is misleading.

Mr. Whitman is referring to future and potential projected tax payments from the county's ethanol plants. In other words, he is referring to taxes that aren't currently being collected by the county due to the JOBZ plan, as well as potential revenue from the taxation of ethanol production tanks that are currently exempted.

As such, suggesting that the county would have to shift the tax burden to other properties within the county to make up for a shortfall of $256,000 from each plant is wide of the mark since it isn't earning that $256,000 from each plant in the first place.

Moreover, Martin County will not lose any revenue once the JOBZ plan expires.

Assuming Mr. Whitman's numbers are correct, Martin County will actually see a surplus in revenue from its ethanol plants once the JOBZ plan expires.

As noted in his quote above, according to Mr. Whitman's calculations, the full non-JOBZ taxable amount of one of the plants in the county is projected to be $851,000. Even with a $256,000 tax exemption, the county would collect $595,000 from that plant once the JOBZ plan expires. This in turn represents a potential of an 80 percent increase in tax revenue from the $331,000 currently collected.

Read our original letter published in the Fairmont Sentinel here : Article Missed Mark