Bill would create property tax credit for homesteads in South St. Paul; sponsor says modest relief for taxpayers and school district

Senate File 199, presented to the Senate Taxes Committee, would establish a property tax credit limited to homestead property located inside the city of South St. Paul and tied to capital improvement bond repayment.

“Only homestead properties in the city of South St. Paul would qualify,” Senator Klein told the committee, describing the measure as targeted relief for a city with a relatively low property tax capacity. Klein said the credit “is equal to 70% of the property's property tax attributable to repayment of capital improvement bonds.”

Sponsor’s rationale and local context: Senator Klein told members that South St. Paul has “the 2nd highest municipal tax rate, highest school district tax rate in Dakota county, and the lowest property tax capacity in the county.” He said the proposal would provide an estimated $30 annual credit to the average homestead and “$200,000 to $250,000 in annual aid to special school district 6, South St. Paul.” Klein characterized the bill as an attempt to address a depressed property tax base and support the school district.

Procedure and testimony: Klein said his city manager had intended to testify but was unable to attend because of illness. He also told the committee the bill (or a version of it) had been before the Senate previously and that the chair had changed language to an appropriation in a prior omnibus package.

Action and status: The bill was laid over for consideration in the omnibus taxes bill. The committee did not vote on final passage during the hearing.

Background detail: Sponsor said median household income in South St. Paul “continues to lag behind” other parts of Dakota County and estimated the per‑homehold effect as modest while the school district impact would be larger.