League to cities: Even if you keep levy flat, your tax rate will rise

The League of Minnesota Cities reiterated this morning that local government officials have a complicated set of tax and budget questions in front of them this fall.

And almost like a mantra, the League said repeatedly that even if local governments freeze the amount of property tax they levy next year, property tax rates will rise. Because of changes state leaders made this summer, to keep actual taxes flat, local governments will likely have to reduce their overall levies. By how much? It gets complex.

The organization held a webinar for city officials trying to figure out the impact of what the state did in its special legislative session this summer. Specifically, officials were talking about the replacement of the Market Value Homestead Credit with the Homestead Market Value Exclusion, trying to help cities prepare for what an official in Austin feared would be some "ugly" truth-in-taxation meetings this fall.

As I said earlier here on the Ground Level blog and with Tom Crann on All Things Considered, the shift eliminates a credit homesteaded homeowners have received on their property taxes, replacing it with a way of reducing home values (for tax purposes) to cushion the blow.

The change will shift the property tax burden to non-homestead property and even so may still leave home property taxes higher because overall property valuation will decline. The precise impact will vary from one community to the next, so it's hard to know the reaction from property owners until we see the truth-in-taxation notices that get mailed out in November.

The League's Rachel Walker told cities this morning it may be able to do some computer modeling to take into account the property mix in their communities and help predict the impact of the new law.

Create a More Connected Minnesota

MPR News is your trusted resource for the news you need. With your support, MPR News brings accessible, courageous journalism and authentic conversation to everyone - free of paywalls and barriers. Your gift makes a difference.