Biggest budget item passes House, creating a tax forfeiture settlement account

“The Tyler Settlement.”

That’s what it says in the supplemental budget target agreement reached between Gov. Tim Walz and legislative leaders in March, next to a dollar amount of $109 million. It’s the largest item on the page, amounting to about 23% of the state’s $477.5 million proposed supplemental budget for the next fiscal year.

What is “the Tyler Settlement”?

In brief, the U.S. Supreme Court ruled against Hennepin County in a case, Tyler v. Hennepin County, saying that the county couldn’t keep the proceeds of the sale of property it had seized because of delinquent property taxes. It could keep enough from the sale to pay off the tax bill and related fees, but the rest had to be returned to the original owner, the court ruled.

But Hennepin County was only following state law, so two things have had to happen: State tax forfeiture laws need to be changed to be made constitutional, and money needed to be appropriated to Minnesotans who suffered a similar fate to that of Minneapolis’ Geraldine Tyler, i.e. losing property due to unpaid property taxes but receiving nothing from its subsequent sale.

The money part of that puzzle has now passed the House. HF5246, as amended, is a bill sponsored by Rep. Dave Lislegard (DFL-Aurora) that was approved 127-0 Thursday and sent to the Senate.

The bill that changes the state’s tax forfeiture laws to make them constitutional, HF4822 —sponsored by Rep. Sandra Feist (DFL-New Brighton) — awaits action on the House Floor.

“House File 5246 funds the settlement agreement approved by the attorney general’s office and counties statewide,” Feist said. “The legislation is critical in preventing continued lawsuits and financial pain for communities across the state. It represents a bipartisan agreement to make sure that no counties face financial ruin as a result of the unconstitutional laws that were crafted by the Minnesota Legislature in 1935.”

Feist successfully added an amendment to make language within the bill consistent around county participation.

The $109 million appropriation is for fiscal year 2024, and would provide payments for settling litigation related to the retention of tax-forfeited lands, surplus proceeds from the sale of tax-forfeited lands, and mineral rights in those lands. It would also require participating counties to provide Minnesota Management and Budget with necessary property tax data, agree to make a good faith effort to sell any remaining properties forfeited prior to 2024, and remit to the state 75% of proceeds from those sales.

“This bill is bipartisan and is needed very much by our counties,” said Rep. Patti Anderson (R-Dellwood). “I think this is an excellent, excellent bill.”