As we celebrate the Christmas season many homeowners, farmers and business owners are looking at their property tax statements and asking what happened? A friend of mine called me and said his property taxes went from $2,400 to $4,900. While not typical, judging from the turn out at the Truth in Taxation hearings thru out our area large increases are not uncommon.
Well what did happen? The Republican-led Legislature in an effort to balance the State’s projected budget shortfall of around $5 billion cut out the Homestead Market Value Credit which lower property taxes for homeowners statewide about $260 million. The credit was replaced with the Homestead Market value Exclusion. This saved the State the $260 million the Republicans were looking for but by not buying down property taxes in areas like ours that have a low property tax base, ( little commercial base, mostly homes and farms), all local taxes from schools, cities, townships and counties are paid for by the property owners with out the State aid credit.
The Homestead Market Value Exclusion the Republicans put in place lowers taxable value on some lower value homes up to $30,000 and is a decreasing amount as home value increases. This is a pure tax shift; without the state credit no property taxes are bought down, so every dollar saved with the Exclusion other properties pick up the difference, especially businesses. This is why so many people have been at the Truth and Taxation hearings complaining to locally elected officials, who were blindsided by the Republican change.
Representative Bob Barrett, to his credit, has been to the county and some city Truth and Taxation hearings. As usual Senator Sean Nienow is absent. I suppose he’s hoping it all goes away. Beyond pointing a finger at the county board or city councils, Rep. Bob Barrett has very little to stand on. I can’t say where Representative Kurt Daudt is on all this. As a former county commissioner, he had to know what his vote would mean to local property taxes.
Minnesota has had a progressive income tax at the state level for many years, if you make more, you pay more. However, with property taxes there is no correlation between your properties’ value and your income. That’s why the Homestead Market Value Credit was developed in the first place, in areas like ours with a low tax base the credit has helped property owners for years by the state buying down their property taxes so they can afford to stay in their homes.
Local Governments who levy the property taxes do a good job providing services like police and fire protection, libraries, parks, plowed streets, sewer and water, good schools and on and on. Senator Sean Nienow, Representative Bob Barrett and Representative Kurt Daudt in voting to remove the Homestead Credit have cut many of our area property owners off at the knees, and they need to be held accountable for their actions.