The average proposed property tax increase across the state of Minnesota is 1.2 percent, according to new data compiled released by the Department of Revenue Wednesday. Levy increases, when coupled with the end of a homestead tax credit, could increase taxes by about 4.7 percent, or $379 million, the department said.
The most significant average increase — about 3.3 percent or $7.3 million — comes from Minnesota townships, followed by the statewide business property tax at 2.6 percent, about $21 million. The next highest average increase is from cities at 2 percent, or $37.4 million.
If all proposed levies were eventually approved, non-school property tax levies would increase statewide by $97.2 million in 2012. Including school district levies would add about $2 million to the total.
“Minnesota’s local governments have been working hard to keep property tax levies down, even in the face of deep cuts in state aid programs like local government aid and county program aid that have forced them to trim their budgets and to cut services,” Minnesota Revenue Commissioner Myron Frans said in a statement releasing the data. “The combination of eliminating the homestead credit and cutting local government aid means that despite the responsible actions of local officials, property taxpayers in many areas will see real tax increases.”
The Revenue Department’s data release comes at a time when an increasing amount of attention at the Capitol has been placed on property tax issues, whether it be because of a near-record level of school levy increases before voters earlier this month or because of some abnormal property tax levy increases of more than 10 percent in some areas.
DFLers have largely sought to blame Republicans for both explanations — whether by blaming the GOP for stagnant K-12 funding or the elimination of the market-value homestead tax credit. The program, which used to provide property owners with a direct credit, was changed last session into a market value tax exclusion program. That allows property owners to deduct some of the value of their home in order to pay less in taxes. But the difference has left some local governments to raise taxes to make up the difference.
DFLers have already pre-filed legislation for the 2012 session to repeal the change — although they have yet to say how they’d pay for it.
Republicans, for their part, have largely defended the changes and deflected blame. But they have felt pressure from some local governments and voters, not to mention some Republican lawmakers at the Capitol. Just last week, House Taxes Chairman Greg Davids unveiled an $80 million property tax relief package for the coming year that he said would be a “top-tier priority” for GOP leaders.
That effort, Davids said, would be paid for with corresponding — and yet unspecified — budget cuts elsewhere.