Minnesota property taxpayers looking at 4.7 percent increase

The hundreds of cities, schools and counties in Minnesota are proposing to raise the state's total property tax bill by a combined $99 million next year. That will be up 1.2 percent to about $8.2 billion, the lowest increase in some years.

But in past years a slice of that bill has been paid by the state, and that isn't going to happen next year. (The state eliminated the homestead credit and its associated reimbursement scheme.)

So in reality, homeowners, business people and other property owners will pay the full amount. That's a 4.7 percent increase for them. Another way to look at it: Those taxpayers are paying a total of $379 million more than this year. That's the biggest increase since 2009.

The numbers address what has been a contentious debate since the state solved its budget problem temporarily last summer. DFLers have argued that the state's action simply forced local governments to raise property taxes. Republicans have responded that local government officials have the power to trim budgets in response to less state aid.

These aggregated numbers don't resolve that debate but they do show that local governments chose to pass on at least some increased costs to property taxpayers.

State revenue commissioner Myron Frans offered this analysis in a press release:

Minnesota's local governments have been working hard to keep property tax levies down, even in the face of deep cuts in state aid programs like local government aid and county program aid that have forced them to trim their budgets and to cut services. The combination of eliminating the homestead credit and cutting local government aid means that despite the responsible actions of local officials, property taxpayers in many areas will see real tax increases.

Keep in mind these numbers don't include new school levies that voters approved earlier this month. Also, they reflect proposed levies. City councils, county boards and school boards have until the end of December to reconsider their levy amounts. They can lower them (and thus the proposed taxes detailed in the notices property owners have received in recent days). They cannot raise them.

Next week, those local governments start to hold hearings allowing property owners to vent.

The biggest dollar increase is coming from cities, which the state hit hardest with restrictions in local government aid this year.

Here's a breakdown of which local governments are raising how much:

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As the Minnesota Department of Revenue noted in releasing the compilation, individuals' experiences can vary widely. Changing property values are always a factor, and so are spending decisions by local governments. This year, a huge factor has been the elimination of the homestead credit and the creation of a homestead exclusion. That has shifted the property tax burden in ways that were hard to predict and that vary from community to community.

More about how communities are coping with austerity at our Forced to Choose site.

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