As property owners await news of whether their taxes will go up next year, Senate Tax Committee Chair Julianne Ortman, R-Chanhassen, says legislators aren’t to blame if they do.
She made her case in an opinion piece published in the Star Tribune on Sept. 20, 2011, pointing out that the conventional wisdom that property taxes go up as state aid declines doesn’t always hold true.
“Back in 2010, as now, some at the Capitol assumed local officials would dramatically raise property taxes,” she wrote. “In reality, property tax levies across the state went up just 1.9 percent from 2010 to 2011 – the smallest increase since 2002.”
Ortman’s claim is correct, but it deserves some context.
State aid and property taxes have a long and complicated relationship. For many years, the state has doled out cash to local governments to help them pay for services, such as police and parks, without raising property taxes. The idea is to ensure that less affluent communities – and therefore communities with smaller property tax bases – can provide the same services that wealthy communities can.
In recent years, as Minnesota’s budget deficit grew, state aid has frequently been the target of cuts, and in some cases, communities have had to increase property taxes to keep services intact. And relatively slow-growing school funding means some school districts have asked for more tax dollars to pay for education programming.
Ortman’s correct that statewide tax levies increased by 1.9 percent between 2010 and 2011, and that it’s the smallest increase since 2002, according to data provided by the Minnesota Department of Revenue.
Her claim comes with a few important qualifiers, however.
First, she’s talking about a statewide statistic. Some communities saw much larger property tax increases last year, and others saw their property taxes decline. And in other recent years, property taxes statewide have gone up quite a bit. For instance, between 2002 and 2003, taxes increased by 8.8 percent and in 2006, they increased by 9.2 percent from the year before.
Further, there were big changes in the latest budget that will have a significant impact on property taxes going forward. To save money, legislators eliminated the market value homestead credit, which provided some homeowners with property tax breaks and reimbursed cities, counties and school districts for the tax shortfall.
Lawmakers replaced the program with a new tax break, but the state will no longer be making up the cash communities are missing as a result of a smaller tax base.
That means some communities will likely increase their tax levy. And even if they don’t, some property owners will find themselves paying more in taxes regardless, local officials say.
While it’s important to view Ortman’s claim in context, she’s correct that last year’s levy increase was the smallest in nearly a decade. This claim earns an accurate.
The Star Tribune, Local taxes come from local governments (don’t blame GOP), by Sen. Julianne Ortman, Sept. 20, 2011
The Minnesota Department of Revenue, Certified 2011 Property Tax Levies, accessed Sept. 27, 2011
Minnesota Public Radio News, Minnesota’s property tax change comes into focus — kind of, by Dave Peters, Sept. 23, 2011
Email exchange, Peter Winiecki, spokesman, Sen. Julianne Ortman, Sept. 27, 2011
Email exchange and data from Lisa Erickson, spokeswoman, Minnesota Department of Revenue, Sept. 27, 2011