Property tax uprising brewing
That rumble you hear may be a property tax uprising that could be starting in the suburban communities.
The trigger well may be the property tax increases homestead and commercial property owners will receive this month.
The headline, according to some county administrators, is the property tax is up because the Minnesota Legislature, rather than increase a state-level tax, chose to eliminate the homestead tax credit.
This credit was meant to level the playing field of taxpayers and give some relief to property taxpayers in the “have-not” communities.
This is part of the pain taxpayers must feel as the state faces a deficit of $5 billion, says Rep. Greg Davids, R-Preston, chair of the House Tax Committee.
District 53A Rep. Linda Runbeck, R-Circle Pines, said don’t blame the Legislature. Blame those local-level officials who won’t cut jobs and reduce expenses to make up for the lost state aid.
So far the property taxpayers have been silent. They don’t realize that Minnesota governments get 40 percent of their revenue from the property tax, compared to 33 percent from the income tax and 27 percent from the sales tax.
Most counties, anticipating the loss of the credit, did cut expenses, but the loss of the tax credit of course affects not only counties, but cities and school districts.
Assuming all taxing jurisdictions did not increase the tax levy, in Anoka County a home valued at $177,000 would be taxed an extra $77, due to the loss of the tax credit. That could vary from one city to another.
(Anoka County cut expenses by $8,150,000, which is roughly what the county lost in homestead credit aid. This is the first time the levy has been reduced.)
In Dakota County, based on all 2011 property tax levies, a home with value of $164,200 would be taxed $51 more due to the loss of the tax credit; a home valued at $246,000 would be taxed an additional $86, according to a state study.
(Dakota County has the fewest number of staff per resident of the seven metro counties and hasn’t increased its tax levy for three years.)
Feeling the heat, Davids this week rolled out a plan he will pursue as House Tax Committee chair that he says will provide $80 million in property tax relief. His plan would give an 18 percent cut in state-wide property tax for commercial and industrial properties. It would freeze the business property tax levy; provide property tax relief to homeowners whose local property tax went up by 12 percent or more and would increase the maximum reduction for eligible homeowners by 20 percent.
Republicans, who control both houses of the Legislature, know a key campaign issue next year will be the policy question of forcing property owners to pay more in property taxes while not increasing taxes on the wealthiest Minnesotans.
Already, DFL legislators are proposing legislation that would restore the homestead credit and increase the income tax on wealthier Minnesotans, as Gov. Mark Dayton has proposed.
With both sides prepared to do battle over property taxation, the control of the Minnesota House and Senate will be at stake next November. — Don Heinzman