Final tally: Property taxes rise 4.7 percent in 2012

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The final tally is in: Under the pressure of declining state aid, a tough economy and difficult choices about what to pay for, Minnesota’s cities, schools and counties raised the burden on property taxpayers in 2012 by more than $300 million.

In other words, after local officials were Forced to Choose, the tax bill for property owners is rising by 4.7 percent to a total of $8.2 billion, according to the state Department of Revenue.

Many local officials did react to taxpayer unhappiness over early tax estimates by trimming their levies back by year’s end. But at the same time, November’s voter-approved school levies got added to the equation. As a result, the totals are almost exactly as they looked two months ago when preliminary estimates came out.

So in the end, 50 of Minnesota’s 87 counties raised their property tax levies. So did 465 of the state’s 854 cities. So did 191 of the state’s 336 school districts.

That’s a little more than half in each category. But in reality, far more than that actually raised the burden on local property owners. That’s because the state has stopped reimbursing local governments for credits property owners received under the market value homestead credit. In past years, that money was counted as part of the property tax levy even though it was coming from the state, not local taxpayers. So local officials who kept their levies flat or even decreased them a little were still asking local property owners to make up at least some of the missing state reimbursement.

Many local leaders have complained about the increasing pressure on their budgets, partly a result of less state aid over the years. But this raises a point of contention in the mind of Rep. Greg Davids, R-Preston, chairman of the House Taxes Committee. He notes that the state had been failing to make those reimbursements for some time and that some cities and counties took advantage of the situation last year and raised property taxes more than enough to make up for the loss of state help.

As a result, he’s proposing to limit future city and county levy increases to 1.9 percent, with some exceptions.

He also has proposed gradually eliminating the state’s property tax on commercial and industrial property and providing relief for homeowners and others hit hard by changes in property tax law.

As for a DFL proposal to bring back the market value homestead credit, forget it, Davids said this morning. “It’s not coming back.”

Just to show my arithmetic here: At first glance, the total property tax bill of $8.2 billion looks like only a small increase over last year’s $8.1 billion. But last year’s tally included several hundred million dollars the state was supposed to pay local governments via the homestead credit reimbursement. So the burden on property owners was lower than that in 2011, even if the state failed to fully pay its commitment.

You can see the levies for all Minnesota’s taxing jurisdictions by going to the Department of Revenue’s site.

  • Andrew Richner

    4.7% average for half the state instead of 3% on income over half a million dollars. What a bargain of a budget deal — pay more; get less.