Proudly Serving Senate District 34
Legislative Assistant
Dear Friends,
Please check out the "Newsletter" section of my website for my 2012 Legislative Session Wrap-Up.
Also, please feel free to contact my Senate Office with any comments or questions throughout the summer.
Sincerely,
Senator Julianne Ortman
Dear Friends,
Session is almost over. There is a great deal of activity occuring here at the State Capitol. Please see my newest edition of Capitol Report in the Newsletter Section of my website.
Warm Regards,
Senator Julianne Ortman
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December 14, 2011
The Real Impact of the Change to the Homestead Market Value Exclusion (HMVE)
on Property Taxes around MN
As local governments adopt final tax levies and hold truth-in-taxation hearings for constituents around the state, we are receiving additional information from non-partisan staff about what is happening with property taxes across the state. While former and present DFL lawmakers and many editorial writers tried to lead Minnesotans to believe that the change from the Homestead Market Value Credit (HMVC) to the Homestead Market Value Exclusion (HMVE) would lead to drastic increases to be blamed solely on legislative Republicans, here are some revealing facts you should be aware of to dispute this erroneous claim. Following the points are breakdowns of the increase/decrease by region.
(Please note, these figures are before any potential homeowner property tax refunds, and exclude new voter approved referenda.)
· The 2012 estimated statewide net property tax increase of 4.7 percent is comparable to the average net statewide property tax change over the past five years which is 4.4 percent, or a 6.2 percent over 10 years.
· Most notably statewide, homestead property taxes are estimated to increase 1.5 percent. For the previous five-year period, homestead property taxes increased an average of 2.4 percent annually. Source: House Research (Non-Partisan)
Increases on the other largest property types are estimated to 4.4% on residential non-homestead property, 7.4% on regular apartments, 3.9% on commercial industrial property, 11.6% on agricultural property, 11.9% on low-income apartments, and 5.4% on seasonal-recreational property. Source: Senate Tax Staff (Non-Partisan)
In part, the increase on agricultural properties can be attributed to growth in farm land market value. Statewide, homestead market values decreased by 3.8%, while agricultural land increased by 4.7%. The economic market value changes have had a shifting effect from homesteads and other properties to agricultural land.
· Percentage increases do not tell the entire story. For example, there can be a large percentage change but the dollar change is relatively small.
· Based on figures from non-partisan legislative staff, the maximum affect of levies (excluding NEW voter approved referenda) shows a statewide average increase that is actually lower than most years since the HMVC was enacted.
· As is typical of changes in property tax law, the move from the HMVC to the HMVE showed some shifting of tax responsibilities among all property taxpayers. This shifting tended to decrease taxes among lower-value homestead residential property.
· The truth is that the change to the Homestead Market Value Exclusion has advantages, namely stability for both homesteaded property owners and local governments. Local governments will receive the full amount they levy from their taxpayers, and in the words of the Department of Revenue “local governments do not need to plan for further state reimbursement cuts –because there is no longer a payment to cut.”
· According to the MN Inter-County Association, the consequence of continuing the status quo would have been that 178 cities and 26 townships would have received no reimbursement. Also notable is that there was no loss of revenues for school districts which previously received $60 million from the credit reimbursement.
· Also according to the MN Inter-County Association, the changes in the homestead property tax relief were a factor in constraining property tax increases. Of Counties: 12 reduced their levy and 24 either reduced or froze their 2012 levies. Of Cities: of 854, 94 reduced and 288 froze or reduced.
· Those who are trying to target blame for specific increases likely opposed Republican measures to lower business and seasonal property taxes by phasing out the statewide property tax which garnered no DFL support in the Senate and was vetoed in by Governor Dayton. The tax bill vetoed by Gov. Dayton also included a property tax levy cap that would have mitigated the potential property tax impact for all properties.
· Further, the myth that the Republican legislature slashed local government aid and county aid must stop. LGA and CPA payments were maintained at 2010 levels through 2013 -- no increase, no decrease. Regardless of that fact, more than half of Minnesotans live in cities that don’t qualify for LGA, yet the state will spend $1.18 billion on LGA and CPA in fiscal years 2012-13. More problematic is the fact that these subsidies get sent to cities and counties, who often spend the money rather than redirecting it to taxpayers for property tax relief.
Following, please find figures produced by non-partisan staff that details the regional impact of homestead property taxes. The information below reflects averages for areas. Property taxes will vary by the jurisdictions depending on numerous factors. There are 14 reasons listed in an Association of MN Counties brochure for why property taxes will change. They include market value change for the individual property owner; market value changes for other properties in the jurisdiction; local budget decisions for school district, city, county, special taxing districts; and state law changes. The homestead market value credit change may be a factor in some of the property tax changes, but the main driver is still the local budget decisions.
On average, here are examples of what's actually happening in selected regions of the state (complete details in attached report) Final property taxes may change when local governments certify their final levy by end of December. They may lower the levy but cannot raise their levy from what is reported here.
Statewide, homestead property taxes are estimated to increase by 1.5%
|
Low value home: |
0.6% |
$8 increase |
|
Average value home: |
1.7% |
$39 increase |
|
High value home: |
2.2% |
$70 increase |
Greater Minnesota, homestead property taxes are estimated to increase by 3.8%
|
Low value home: |
3.9% |
$34 increase |
|
Average value home: |
3.8% |
$57 increase |
|
High value home: |
3.9% |
$82 increase |
East central cities (includes Pine, Chisago, Isanti Counties), homestead property taxes are estimated to increase by 0.7%
|
Low value home: |
-6.2% |
$72 decrease |
|
Average value home: |
0.1% |
$3 increase |
|
High value home: |
2.9% |
$79 increase |
Central Minnesota cities (Benton, Sherburne, Stearns, Wright Counties), homestead property taxes are estimated to increase by 1.3%
|
Low value home: |
-2.2% |
$28 decrease |
|
Average value home: |
1.1% |
$22 increase |
|
High value home: |
2.4% |
$69 increase |
Northwest cities (includes Becker, Douglas, Otter Tail Counties), homestead property taxes are estimated to increase by 3.3%
|
Low value home: |
-2.2% |
$17 decrease |
|
Average value home: |
2.6% |
$34 increase |
|
High value home: |
4.4% |
$81 increase |
North Central cities (includes Beltrami, Cass, Crow Wing Counties), homestead property taxes are estimated to increase by 3.9%
|
Low value home: |
5.4% |
$36 Increase |
|
Average value home: |
5.3% |
$63 increase |
|
High value home: |
5.3% |
$91 increase |
Southwest cities, homestead property taxes are estimated to decrease by -0.1%
|
Low value home: |
-6.6% |
$49 decrease |
|
Average value home: |
-3.0% |
$36 decrease |
|
High value home: |
0.6% |
$10 increase |
South central cities (includes Brown, Blue Earth, Le Sueur Counties), homestead property taxes are estimated to increase by 5.4%
|
Low value home: |
0.6% |
$5 increase |
|
Average value home: |
4.7% |
$66 increase |
|
High value home: |
6.3% |
$127 increase |
Southeast cities (includes Rice, Steele, Winona Counties), homestead property taxes are estimated to increase by 3.6%
|
Low value home: |
-0.7% |
$7 decrease |
|
Average value home: |
2.9% |
$47 increase |
|
High value home: |
4.4% |
$102 increase |
Olmsted County, homestead property taxes are estimated to increase by 4.6%
|
Low value home: |
2.7% |
$37 increase |
|
Average value home: |
4.7% |
$105 increase |
|
High value home: |
5.6% |
$171 increase |
Anoka County, homestead property taxes are estimated to decrease by -4.1%
|
Low value home: |
-5.7% |
$87 decrease |
|
Average value home: |
-4.0% |
$99 decrease |
|
High value home: |
-3.3% |
$112 decrease |
Washington County, homestead property taxes are estimated to increase by 1.0%
|
Low value home: |
1.1% |
$19 increase |
|
Average value home: |
1.2% |
$34 increase |
|
High value home: |
1.2% |
$48 increase |
Dakota County, homestead property taxes are estimated to increase by 0.3%
|
Low value home: |
-0.5% |
-$9 decrease |
|
Average value home: |
0.1% |
$4 increase |
|
High value home: |
0.5% |
$16 increase |
Carver and Scott Counties, homestead property taxes are estimated to increase by 2.0%
|
Low value home: |
1.5% |
$30 increase |
|
Average value home: |
2.3% |
$75 increase |
|
High value home: |
2.7% |
$121 increase |
Southeast Hennepin, homestead property taxes are estimated to increase by 1.0%
|
Low value home: |
0.0% |
-$1 decrease |
|
Average value home: |
1.3% |
$45 increase |
|
High value home: |
1.9% |
$91 increase |
Minneapolis, homestead property taxes are estimated to increase by 1.1%
|
Low value home: |
-1.8% |
$41 decrease |
|
Average value home: |
1.2% |
$43 increase |
|
High value home: |
2.5% |
$128 increase |
St Paul, homestead property taxes are estimated to increase by 3.6%
|
Low value home: |
-0.4% |
$6 decrease |
|
Average value home: |
3.2% |
$87 increase |
|
High value home: |
4.8% |
$181 increase |
Duluth, homestead property taxes are estimated to increase by 7.9%
|
Low value home: |
5.7% |
$63 increase |
|
Average value home: |
7.6% |
$139 increase |
|
High value home: |
8.4% |
$214 increase |
Taconite cities, homestead property taxes are estimated to decrease by -0.1%
|
Low value home: |
-8.2% |
$27 decrease |
|
Average value home: |
-2.5% |
$19 decrease |
|
High value home: |
1.5% |
$19 increase |