Viewpoint: Let’s keep property tax changes fair for all MinnesotansThis November, Minnesotans will cast ballots to fill the seats of all 201 members of the Legislature. As usual in an election year, property taxes will be a hot topic.
By: Woodbury Mayor Mary Guiliani, others, Woodbury Bulletin
This November, Minnesotans will cast ballots to fill the seats of all 201 members of the Legislature. As usual in an election year, property taxes will be a hot topic.
As mayors of seven Twin Cities suburban communities, we are well-versed in the complexities of our property tax system. At the city level, the rubber literally meets the road. Our city councils have made tough decisions over the past several years to maintain critical services while doing our best to keep property taxes down.
Last year, the legislature and Gov. Dayton enacted property tax changes that have caught some homestead and commercial property taxpayers by surprise. The biggest change was the transition from the Market Value Homestead Credit (MVHC) to an exclusion for homes valued under $413,800.
Under the old MVHC program, the state directly paid a portion of homeowners’ property taxes. However, the state frequently failed to pay the full amount. In nine of the past 11 years, the state did not fully reimburse cities for MVHC payments, creating unanticipated shortfalls in local budgets.
The new Homestead Market Value Exclusion instead shields a portion of a home’s value from taxation. The state will no longer pay for this homeowner property tax relief. Instead, it’s funded locally by residential and commercial property owners within that home’s jurisdiction.
This exclusion is a typical method used by other states to provide property tax relief. The upside is that cities will have a much more reliable revenue stream to establish their budgets. The downside is that in this transition year, some homeowners will see a one-time jump in their taxes. Cities with more lower-valued homes will see a larger impact. To help offset some of these increases, lawmakers increased funding for the “circuit breaker” property tax refund program that benefits low-income households.
During this legislative session, some lawmakers are likely to call for additional changes. Our message to the Legislature is simple: keep any property tax changes fair for all Minnesotans. Dividing Minnesota into “greater Minnesota” and “metro area” camps doesn’t benefit anyone. While some property tax increases in greater Minnesota may show large one-time growth on a percentage basis, the starting point is frequently much lower than in the Twin Cities. In addition, a Minnesota Department of Revenue report last year showed that as a percentage of income, metro area property taxpayers pay more in property taxes than those in greater Minnesota.
Property taxes are one of government’s more visible and transparent funding sources. We believe that’s a good thing. We are hopeful the 2012 Legislature will work with cities like ours to ensure Minnesota’s property tax system continues to head in the direction of more fairness and transparency. For more information, please visit www.propertytaxfairness.com.
Jim Hovland is mayor of Edina, Elizabeth Kautz is mayor of Burnsville, Kelli Slavik is mayor of Plymouth, Mary Guiliani Stephens is mayor of Woodbury, George Tourville is mayor of Inver Grove Heights, Nancy Tyra-Lukens is mayor of Eden Prairie, and Gene Winstead is mayor of Bloomington.