ST. PAUL, MN-A group of Minnesota small business owners sent a letter Monday pleading with Minnesota Gov. Jesse Ventura and the Minnesota Legislature for property tax reform and relief. Arguing the state’s system is hurting its economy, the business owners say they support the tentative property tax agreement announced by Ventura and legislative leaders on May 25.

The Democrat-controlled Senate, Republican-controlled House and Independent governor have been unable to iron out the details of the tax and spending bills, and remain deadlocked.

In the letter, signed by 22 of the members of the Minnesota Property Tax Reform Coalition, the group argues that “commercial/industrial property tax reform is the most significant change this Legislature can make to attract investment capital and jobs into the state of Minnesota.”

The group — representing hundreds of business owners from metro and rural Minnesota – cites tatistics issued by the Minnesota Department of Finance on June 7 as evidence that state’s business climate must not be taken for granted. The figures show spending onbusiness equipment decreasing by 3% in 2002 and increasing by 5% in 2003, a rate ofincrease much lower than predicted in February.

Corporate profits now show a 5.5% decline in 2002 and 5% increase in 2003, also an increase lower than earlier forecast.

“We are asking the Legislature to show a concern for our economy and the companies that support it,” says Scott Thiss, chairman and CEO of S&W Plastics in Eden Prairie, MN. “Over the long term the property tax relief and rate compression will make a difference for many small businesses looking to invest, expand, or avoid layoffs.”

The letter warns that “lawmakers should heed these warnings, because every month businesses like ours must make tough decisions as we balance expenses with revenue.”

The plan incorporates a 10% reduction in commercial/industrial property taxes, a 21% multifamily rental property taxes, and an 18% reduction in homestead property taxes. The classification rate on C/I property with value under $150,000 is reduced to 1.5%; the rate on C/I property over $200,00 falls to 2.1%.

The plan also calls for a statewide business property tax on business and cabins.

“We accept the need for this tax alternative to avoid creating a so-called windfall for businesses,” Thiss says. “The tax, however, must stay at a fixed dollar amount and not be tied to any spending initiative — otherwise there’s a new windfall problem whichbenefits government spending.”

Some legislators and business owners are worried this new tax will be used to pay for the state’s education needs, and that there will be a temptation to tap this source for a variety of education initiatives that will escalate spending. Minnesota business property currently is 15% of the market value in Minnesota but pays 30% of the property tax, the group says. The May agreement reduces businesses’ share of the property tax to 25.6%.

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