FAIRMONT - A proposal to make production tanks tax exempt could have a serious effect on counties with ethanol plants.
The Minnesota Department of Revenue recently issued a report recommending exempting production tanks from taxation. While originally aimed at tanks used for producing beer, wine or dairy products, larger tanks such as those used for ethanol were drawn into the fold.
"It was supposed to protect smaller private distilleries," said Martin County Commissioner Dan Schmidtke. "But then all distilleries were brought in. That takes thousands and thousands of dollars out of the counties."
A bill to exempt the tanks was introduced in the state Legislature last year, but lawmakers requested more information.
The Department of Revenue report was released Jan. 30.
According to Martin County Assessor Dan Whitman, the report fails to factor ethanol plants operating under the JOBZ program into the equation. The report, while admitting it is based on limited data, estimates the property tax base will be reduced by $30.1 million statewide for biofuels, alcoholic beverages and the dairy industries combined.
"Once Martin County is done with JOBZ, that's more like $14.5 million in our county alone," Whitman said. "That information wasn't included because of it being in the JOBZ zone ... We have two of the biggest ethanol plants in the state, and it will affect us the most."
As one ethanol plant is being released from the JOBZ program, with the other due to be released in three years, the two are set to bring in more than $850,000 each in taxes to the county.
"Right now, one of them has $331,000 in taxes, and if fully taxable would be $851,000," Whitman explained. "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."
It's a bitter pill to swallow, since part of the appeal of bringing the ethanol plants to Martin County with the JOBZ program was the tax windfall the plants would generate once the program expired.
"We spent money getting them here, because we believed we would be recouping those costs through the taxes," Whitman said. "If this passes, we lose that reimbursement."
The Minnesota Association of Assessing Officers has so far been the only organization to speak out against the proposal.
Whitman - who is vice-president of the assessors organization - has requested support from the Martin County commissioners and from leaders of other counties with ethanol plants.
"The whole idea when they came here was to help out our tax base," Schmidtke said. "So this won't be good. I don't think half the legislators know exactly what's all included in this ... I know no one is a fan of paying taxes, but we do need to make sure everyone pays their fair share."