House GOP pushes for $4 billion property tax refund as DFL warns of risks to MN's hospitals, schools

During an April 9 House floor session, Rep. Isaac Schultz (R-Elmdale Township) unsuccessfully moved to suspend House rules to take up a bill that would appropriate $4 billion toward a special one-time property tax refund, even though such a bill had yet to find its way onto an agenda of the House Taxes Committee.

That changed Tuesday when a virtual duplicate of the bill, HF4906, was presented, this time sponsored by the committee’s co-chair, Rep. Greg Davids (R-Preston).

Under the bill, owners of residential homesteads — and of the portion of agricultural homesteads consisting of the house, garage and immediately surrounding 1 acre of land — would be eligible to apply for a refund of property taxes paid in 2026.

It was laid over, as amended, for possible omnibus bill inclusion.

But most of the response to the bill made clear that it likely wouldn’t receive support from the DFL side of the room.

“The biggest dark cloud I see hanging over this session is the possible loss of our largest safety net hospital in Hennepin County,” said Rep. John Huot (DFL-Rosemount). “Until we have that figured out, I don’t see us being able to look at a $4 billion tax giveback when we’re going to have to come back and probably charge more in the future.”

The bill’s $4 billion appropriation would be divided among all eligible properties in proportion to the amount of tax due on each property in 2026, with the refund not exceeding the total amount of tax due on the property.

A clawback provision would require a property owner to return any refund if the 2026 taxes due on the property are not paid. Additionally, the total refund under the bill, combined with any homestead credit refund or targeting refund, could not exceed the total amount of tax due on the property in 2026.

The Revenue Department estimates that the $4 billion refund program would reduce the General Fund by $3.8 billion when accounting for interactions with income tax and other property tax refunds. But House researchers said that it’s uncertain whether the refunds would be taxable.

To receive a refund, property owners would need to apply by Sept. 15, 2026, with refunds paid by Dec. 31, 2026. If all approximately 1.6 million eligible homeowners apply, the Revenue Department estimates that the average refund would be approximately $2,500.

For DFL members, the size of the reduction in the General Fund is a sticking point, with Rep. Cheryl Youakim (DFL-Hopkins) speaking of what a difference $4 billion would make in improving education funding.

Rep. Michael Howard (DFL-Richfield) challenged Davids on the bill, saying that it diverged from Davids’ usual more cautious approach to taxation and spending.

“The bill is scalable,” Davids said. “But I think the difference is that some of us believe that the people can decide what to do with their money, while my good friends on the other side believe that it has to be through government. … You’re talking about holes in state budgets, but what about the holes in people’s budgets?”

Rep. Mike Wiener (R-Long Prairie) concurred.

“What we’re doing with this bill is offering some relief from the oppressive taxes that keep coming from the state. What about keeping money in their pockets?”