|Hidden Tax Increases|
Minnesota homeowners and small businesses are about to pay the price for the legislative budget deal brokered by the majorities in the legislature last summer. While they claimed loudly that the budget shortfall was solved without raising taxes, this is simply not true. Instead of raising taxes on people making more than $1 million a year, homeowners and businesses will see their property taxes increase.
In order to plug a hole in the massive budget deficit, the legislative majorities eliminated the Market Value Homestead Credit. For 44 years, the state has partnered with local government in giving relief to property taxpayers in the form of a credit. That credit was used to offset a portion of property taxes, up to $304 for some homeowners. Last session, a Republican proposal passed that eliminated the credit. The new Market Value Homestead Exclusion replaced it, but left a large hole in local government budgets. The result: property tax increases.
On average, Hastings residents will see their property taxes increase over two percent solely based on this one change. South Saint Paul residents will see an average increase of over six percent.
The backdoor tax increase is a continuation of the Tim Pawlenty administration game plan. In Governor Pawlenty’s eight years in office, property taxes increased by $3 billion. The result of the 2011 Tax Bill will mean another $1 billion increase over the next three years.
The majorities in the Senate and House of Representatives had a clear choice this past session. They could have asked the very richest Minnesotans - those making more than $1 million a year - to pay their fair share of taxes. Instead, they chose to saddle middle-class families and seniors with a nearly $1 billion property tax increase.
To be fair, the legislature was faced with a number of tough decisions last year as we worked to balance the state’s $5 billion budget shortfall. With a deficit that large, painful sacrifices had to be made. Unfortunately, a shell game was played with Minnesotan’s tax dollars in an attempt to shift blame to local governments and hit homeowners and business owners in the pocketbooks.
It is time to be straightforward with the decisions made in the 2011 session. If you would like to participate in a more in-depth conversation on the Homestead Credit and how it will affect you or your business, I will be hosting a forum on Wednesday, November 30. The forum will be held in the Community Room at Hastings City Hall from 6-7 p.m.
Matt Massman, the Deputy Commissioner of the Minnesota Department of Revenue, will be at the meeting to field questions. Mr. Massman will make a presentation about the Homestead Credit changes at 6:15.