The 2003 study shows that a Minnesota manufacturing company occupying a 70,000-sf building paid property taxes of $124,646, a decline of $11,865 from 2002's tax bill of $136,511. However, a similar business occupying a comparable building in Iowa paid just $66,285, while one located in western Wisconsin, just across the St. Croix River, paid only $64,428. Had the company moved to South Dakota, its tax bill this year would have dropped to $94,889; relocating to North Dakota would drop it to $25,729.
The Minnesota company actually paid $60,218 more than it would have paid had it relocated to a comparable building in Wisconsin, a relocation magnet for many Minnesota firms.
"The cost of property taxes remain a serious problem for Minnesota businesses," says Rebecca McDaniel, an attorney and chair of NAIOP's public policy committee.
Minnesota's high tax-cost-per-worker continues to be a serious obstacle to the state's ability to create more jobs, McDaniel says. If the state of Minnesota is to replace the 43,000 manufacturing jobs lost in the last recession, the 2004 legislature reserve the tax reforms and tackle other issues such as local government spending, local sales taxes and local fees, she adds.
Business property--representing roughly 14.3% of the total value of property in Minnesota--shoulders about 36%% of the local property tax burden, she says.
Minnesota's effective commercial-industrial property tax rate declined slightly during the past year, to 3.66% of assessed market value, compared with 3.83% in 2002 and 4.43% in 2001. However, the current effective rate is still far higher than Wisconsin's rate of 2.45%, Iowa's 3.53%, South Dakota's 2.29% or North Dakota's 2.22%.
The typical Minnesota manufacturer paid $1.78 per sf, down from $2.09 per sf in 2002. That compares with $1.36 per sf in South Dakota, $0.95 per sf in Iowa, $0.92 per sf in Wisconsin, and $0.37 per sf in North Dakota.
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