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Woodbury could see flat property tax levy

The proposed 2012 property tax levy in Woodbury will not increase by even the slightest percentage thanks to a new, last-minute bill passed in July by the Legislature.

City Administrator Clint Gridley said the state's abolishment of the Market Value Homestead Credit (MVHC) gave the city the extra cushion it needed to keep the levy flat for the first time in recent history.

The original proposal in July was to bump the levy by 2 percent, but now it will stay unchanged at about $28.1 million.

Woodbury City Council reviewed the $64.4 million preliminary budget at a workshop Wednesday at the newly remodeled Public Safety Building.

Now that the MVHC has been repealed, the city will not have to make up the difference that was promised by the state when the program was created in 2001.

"We've advocated for years to eliminate the program for the very reason that it has not been funded," Gridley said.

The program was created to inject $200 million into state funds as part of a new tax policy. It was designed to give property owners credit for their homestead's market value. A homestead market value of $200,000 received about $192 in MVHC, according to the League of Minnesota Cities.

But many cities, including Woodbury, ended up picking up the slack on behalf of the state and were never reimbursed, Gridley said.

And in 2003 the Legislature cut Local Government Aid and eliminated it for large cities like Woodbury to balance a state deficit. So the funding for MVHC was reduced dramatically.

While property owners continued to receive the benefit of the credit, some cities were not reimbursed for the full amount of those credits -- Woodbury ended up paying a total of about $6 million over the years as a result of not collecting its total certified levy amount.

But some cities were still receiving reimbursements as well as LGA, which is why the program was inefficient.

"(Legislators) saved themselves a lot of money and they got rid of a broken program," Gridley said. "It works for everyone."

Beginning in 2012 qualifying homeowners will see a portion of their market value "excluded" from property taxes, however, it's still early to determine how the new law will affect individual taxpayers, according to the Association of Metropolitan Municipalities.

Riham Feshir
Riham Feshir is a reporter and photographer for the Woodbury Bulletin. Her coverage includes Woodbury City Hall, Washington County Board of Commissioners and business news.  Follow Riham on Twitter @RihamFeshir for the latest updates.