Big property tax hikes next year
The Becker County Board voted unanimously Tuesday for a zero percent levy increase on property taxes payable next year -- but county taxes will rise anyway, in some cases significantly, courtesy of a state-imposed tax shift.
Owners of agricultural land, commercial property and non-homestead property will all see hikes of 9 percent, just in the county portion of their property tax bills.
Hikes of that much -- and possibly more -- can also be expected in the city, school district and township portions of their property tax bills in those categories, said Becker County Auditor-Treasurer Ryan Tangen.
Blame the State Legislature for killing the homestead tax credit in the special session this year.
That saved the state $265 million a year -- including about $1 million that used to go to Becker County -- and helped solve a big budget hole for the next two years.
That's right. That swishing sound you hear is the buck being passed -- right down to local property tax payers.
Detroit Lakes lost more than $200,000 in state funds, that until now were directly used to lower property taxes in the city. City property taxpayers will make up that loss next year as part of the 6.5 percent levy hike the city needs to meet its own expenses.
Add school districts, townships, and other taxing entities and "you can see where this adds up," Tangen said.
People aren't going to be very happy when they see their property tax bill next year.
The loss of the homestead credit will hurt outstate Minnesota much more than it hurts the Twin Cities metro area, said State Rep. Paul Marquart, a DFLer from Dilworth who chaired the Property Tax Relief & Local Sales Tax Division of the House Taxes Committee from 2006 until Republicans took over the House last year.
"In rural Minnesota we will see three times the property tax increase of someone in a wealthy metro area," he said. "Businesses will see a six times higher increase in outstate Minnesota."
Property tax payers in rural Minnesota will have to make up for 57 percent of the lost homestead funding -- which means paying $158 million more next year.
"That's why it hits us so hard," Marquart said. "The total market value of homes (in outstate Minnesota) is only 35 percent of the state total, but we're taking 57 percent (of the cut). So it's very unfair to rural Minnesota."
He worries about seniors on fixed incomes in particular, and said he's been door-knocking in Detroit Lakes the past few weeks and has had several people each day ask him about the end of the homestead tax credit.
He said a woman on Granger Avenue, who raised half dozen kids there, and now lives on a fixed income, fears she will be forced from her home because of property taxes.
The Legislature is not in session, but on Tuesday in St. Paul, Marquart prefiled a bill to bring back the homestead tax credit, effective 2013. He said the homestead credit has been around since 1968, and has served the people of the state well.
"I introduced this bill now so people know we're listening and we're going to fight as hard as we can to get the homestead credit back," he said in a phone interview.
He believes the bill has a fair chance of passing next session, since lawmakers across the state are hearing from constituents unhappy about the tax shift.
Marquart said DFLers did not favor the tax shift -- many would have preferred Gov. Dayton' s plan to raise the income tax on those making over $1 million a year -- but it was pushed through by Republican majorities in both houses.
"The Republican majority voted for elimination of the homestead credit either in committee or on the House floor 13 times," Marquart said. "This is the Republicans' (plan) hook, line and sinker. We fought this from Day 1 ... It's ludicrous now to try to pin it on the governor. There was a lot the governor had to give in to because they would not accept any tax increases."
Several rookie Republican lawmakers have asked him about the bill, and have said they are considering supporting it.
"We need to take a look at some of these things," Marquart said. "I think people just blindly followed their party leaders."
Although the Legislature did enact a homeowner exclusion to the new law, homeowners will not be held harmless. They too, will see higher property taxes, Marquart said. "The exclusion just doesn't cover it," he said. "It brought some of it down, but (homestead taxes) are still going up."
How much higher depends on the market value of their home.
The homestead credit worked on a sliding scale from a $76,000 home to a $413,800 home, Tangen said.
The owner of a $100,000 home will see a .65 percent tax hike, solely due to the end of the homestead credit.
A $300,000 homestead will see a 4.22 percent hike.
And a $413,000 homestead will see a 9 percent hike, Tangen said.
"No one asked the public, 'would you like to see the homestead credit eliminated?'" Marquart said. "The public was not aware, they were not made aware as the process was going on."
Marquart says he does not have a way to pay for his bill. That's why he prefiled it now, he said, to give people time to thoroughly understand and discuss the issue, and the revenue options, before the next legislative session.