Minnesota Miracle (legislation)

Wendell Anderson, a Democratic–Farmer–Labor Party (DFL) governor elected at age thirty-eight, campaigned in 1970 on a promise to reduce school-district property taxes. He faced a legislature controlled by Conservatives,* and his plan to reform property taxes asked for a 37-percent increase in state spending. It took the longest special legislative session in state history, but he fulfilled the promise. Anderson’s initiative raised income and sales taxes, and he became one of the most popular governors in Minnesota history.

In 1970 Minnesota had 434 independent public school districts, all of them mostly dependent on local property taxes. This led to vast differences in taxation and per-student spending. One paradoxical outcome was that the richest districts, like Edina, had both the lowest tax rates and the highest per-pupil spending. The poorest districts endured just the opposite. Many districts had raised their rates by double digits year after year in the 1960s.

State Senator Wendell Anderson of St. Paul was just one of many legislators who saw that the system needed reform, and that it might be a winning political issue. He got the 1970 DFL nomination for governor and campaigned around the state for school tax reform—specifically, for the state to assume much more of school costs. This would reduce the property tax burdens in almost every district but require higher state tax rates.

At the same time, the non-partisan Citizens League issued a report supporting the partial state school-finance takeover. At a gubernatorial debate, Anderson endorsed the league’s report, while Republican nominee Douglas Head rejected it, calling Anderson “Spendy Wendy.” Anderson defeated Head 54 percent to 46 percent.

In January of 1971, when he took office, Anderson faced a legislature narrowly controlled by Conservatives, 70-65 in the House, 34-33 in the Senate. But school tax reform had crucial allies on the Conservative side, notably Senate Majority Leader Stanley Holmquist.

The issue was complex, both technically and politically. Voters who wanted property tax reductions had to be sold on income tax increases. Conservatives and Liberals worked on competing plans throughout the legislative session, but no agreement was reached. Anderson then called a special session that went on all summer. It produced a bill, which Anderson vetoed—not enough money and not enough structural change.

But the effort wasn’t over. Rather than call another special session, Anderson arranged for the key players from both caucuses to meet in private at the governor’s residence on Summit Avenue in St. Paul. The governor rarely participated, but he made his requirements clear, and in the end he got almost everything he wanted, with substantial bipartisan support. The state took 65 percent of local school costs, and local tax rates were restricted within limits. All but a handful of school districts saw reductions in property tax rates, while Minnesota taxpayers as a whole saw their burden rise by $580 million and the state budget increase by 23 percent.

The reforms came to be known as the Minnesota Miracle: a set of laws comprising the tax changes as well as the Minnesota Fiscal Disparities Act of 1971, which set up a tax-base-sharing program. In his reelection bid three years later, Wendell Anderson carried all eighty-seven of Minnesota’s counties, a feat not accomplished before or since.

*Editor’s note: Between 1913 and 1973, Minnesota legislators did not identify themselves with a party when they caucused or campaigned. Members of the Democratic–Farmer–Labor party formally identified as Liberals, and their Republican counterparts identified as Conservatives. This article reflects that terminology.