If you own a house in St. Paul that’s worth $400,000 or more, brace yourself for a bump in your property tax bill of as much as $500 next year.
On the other hand, if you have a low value home, say $100,000 or less, it looks like your tax is actually going to go down.
The numbers for St. Paul are among the first available as the property tax season cranks up and the number crunchers start doing their thing.
We don’t have a big sample from around the state yet. But there are two important — and separate — questions to ask about St. Paul’s numbers that can be illuminating for residents elsewhere. Why the difference between the two experiences and why the sizable increase for higher value homes?
First, the difference in experience between high and low value homes. Chalk that up mainly to the state’s change in the way tax breaks are figured for many homes. Homes worth less than $413,800 are losing a sliding “credit” and gaining an “exclusion” and that shift is rippling through Minnesota in varied ways. (Keep in mind the car ads on TV — your actual mileage will vary.)
Second, why will owners of high and even median value homes see tax increases of anywhere from 3.5 to 8.5 percent? That finger points mostly at the fact that Ramsey County, the city of St. Paul and the St. Paul School District all are making plans to raise the total amount of money they collect via property taxes.
Here are the numbers:
St. Paul by the numbers
Ramsey County preliminary property tax levy — up 1.7%
St. Paul city preliminary property tax levy — up 6.5%
St. Paul school district preliminary property tax levy — up 3.6%
Tax on selected St. Paul homes
I got the St. Paul numbers from Chris Samuel in the Ramsey County property records division, who based them on three main factors.
First were those three levy increases. All are preliminary and might be lowered by year’s end, but for now, the city, the schools and the county are preparing to seek more money from property taxes than they did last year.
Second was the fact that the median value of a home in St. Paul dropped by 4 percent. For the information I asked from him, Samuel applied that percentage to all values of homes.
Third was the state’s elimination of the market value homestead credit and the creation of the homestead market value exclusion. That removes part of the value of low-value homes from the tax base, effectively shifting the burden toward higher value homes and commercial and industrial property.
For example, a house worth $400,000 a year ago paid $5,926 in taxes in 2011. Now that house is worth more like $384,000 and will pay $6,430, an increase of 8.5 percent.
For another example, a median value house was worth $155,500 a year ago and paid $2,076 in taxes. Now that house is worth about $149,300. Under the new exclusion, it and has a taxed value of $125,500, and it stands to pay $2,151, an increase of only 3.6 percent.
Without that third factor — if the state had left the system alone and continued to reimburse local governments for the credit low value homes were getting — everybody’s taxes in St. Paul would be going up between 4 and 5 percent, Samuel said.
The hardest hit? Small commercial properties, like ma and pa stores with a residence on the second floor, and larger apartment buildings, which are actually seeing their values increase, Samuel said. They could be seeing tax increases in the 16 or 17 percent range, he said.
For all the hand-wringing over the change the state made, it’s interesting to note that, in St. Paul, at least, most of the tax increase for high-value homes is caused by the levy increase, not the new law.
After all the gnashing of teeth about changing formulas and property assessments, as usual, it really boils down to what local governments think they need to spend on the services they think residents want.
Samuel is a little ahead of the game with his numbers. Most of the other tax folks around the state are still waiting for school districts to come up with their preliminary levies for 2012. Once those come out in the next few days, we’ll start to see how this pattern plays out elsewhere.
One footnote: Both Samuel and I remember 1994, what he refers to as “the year of 1,000 angry taxpayers,” when St. Paul residents turned out in huge numbers at Central High School to make life difficult for local authorities.
Just for a little context, the tax increases that generated that passion were from 27 to 35 percent.