By Chad Koenen

Publisher

A unique tax credit could make funding an expansive $27 million building project a bit easier to afford for local taxpayers. The Ag2School tax credit will provide a tax credit of up to 70 percent for local property owners who qualify for the program.

Henning School Superintendent Melissa Sparks said the program was designed to make it easier for rural school districts to pass referendums by providing a tax credit for expansive farms in rural Minnesota. Prior to the tax credit, metro schools were passing referendums at a far higher rate than rural schools due to the financial impact on local farms.

“Metro schools were having a way easier time to pass a referendum than rural schools,” said Sparks. “So (the tax credit) would give rural schools an opportunity to upgrade their facilities like the metro schools.”

As part of the Ag2School tax credit, local farms are taxed fully for their home, garage and one acre of land. They then receive a tax credit from the state of Minnesota for up to 70 percent of the remaining value of their land.

Henning School board member Andy Eckhoff said the program essentially provides state funding to offset the increase in agriculture land tax increases through projects like a school building referendum. 

“The state of Minnesota will cover 70 percent of your property tax increase that is caused by the referendum. So they fund 70 cents on a dollar from the increase,” he said. 

The program is funded through income and sales tax receipts, which Eckhoff said are more heavily collected in the Twin Cities metro area.

“We all pay into this general fund, but logically it is most heavily funded by the metro area,” he said. “This ag tax credit is a way for us to pull that money in our direction.”

If both questions on the May 9 ballot were to garner a majority of voters support in the school district, the state program would essentially cover 16 percent of the overall cost of the project. That means the state finding, and funding collected in the Twin Cities metro area, would help to pay for a portion of the Henning School referendum.

“If both questions pass the total ag tax credit we will get will be (around) $4.3 million, which is 16 percent of the entire referendum,” said Eckhoff. “So the state would basically fund 16 percent of our entire referendum.”

The current school building referendum would qualify for the Ag2School tax credit. However, if the school board were to approve moving forward with some of the necessary projects at the school on its own, the projects may not qualify for the tax credit and the entire project will be funded locally. 

Sparks said some farmers who have reached out to the school’s financing assistant Ehlers have likely learned that the tax impact on their property should the $27 million building levy be passed by voters is less than they originally thought. 

“I think the farmers who have reached out to Ehlers have been pleasantly surprised because they owe a lot less than they thought,” she said. 

One misconception concerning the referendum and school district is that if the Henning School were to ever close and consolidate with another school district that school taxes would then go away as well. Sparks said that is not the case as the school taxes will still be collected and sent to a neighboring community should the school not be located in Henning. 

In November the first question of an expansive school building referendum that would have addressed everything from enhancing elementary classrooms to creating a new entrance at the back of the school and improving indoor air quality failed by just 26 votes. A second question that included repairs to bathrooms and constructing a new gym failed by just 91 votes. The school district has opted to put a similar plan in front of the school district voters once again on May 9.

More about the referendum

On May 9, the school district will seek $22.7 million for HVAC and security improvements, renovated classrooms, a dedicated cafeteria space and student commons, and provide a career and technical education addition. Other improvements such as updated restrooms, roofing replacement, theater equipment, gym and hallway flooring replacement, and a new parking lot, drop-off loop and playground are also included in the first question. 

As part of the first part of the plan, a new CTE facility will be constructed as part of a new addition near where the current front of the building is located, while the current back of the school will feature a more formal entrance and a new parking lot. 

A second question would provide $4.35 million for a multi-use gymnasium. The multi-use gym would provide additional space for physical education classes, host varsity athletics competitions, provide additional space for indoor recess and enable the school to hold multiple practices and fine arts events simultaneously. Henning School is currently the only school district in the Park Region Conference with only two multi-use gymnasiums, which can limit opportunities for students due to a lack of gym space.

After an expansive construction project in the early 1990s, Henning School has not had a major building project or upgrade in almost 30 years. As technology continues to evolve, some of the design aspects of the building from 30 years ago is not as functional for today’s students who rely on technology more than ever before, as well as teaching that involves more action based learning and not just students sitting in a row as a teacher talks in front of the classroom.

In addition, things like tuck pointing on the outside of the building and roof repairs need to be done on a building that is 30 years old as part of general maintenance.

If both parts of the question were to pass this time around, the monthly impact for a residential home owner in the school district for a $100,000 home would be just $17 per month. Should only the first question pass the monthly tax increase would be $14 per month and the second question would cost just $3 per month. The second question cannot pass without the first question also passing by a majority of the voters.

Early voting is currently taking place every day school is in session at Henning School at the school. The special election will be held on May 9 at the Henning City Office. 

Editor’s note: This is the final of three articles to be featured in the Citizen’s Advocate in advance of the May 9 special school referendum.