Minnesota property tax rates could increase again next year, in spite of the $2.1 billion tax bill that was supposed to give homeowners a break.
The Minnesota Department of Revenue released preliminary property tax levy rates Tuesday that showed the state's cities, counties, townships, schools and special taxing districts planning across-the-board tax increases. The actual rates will not be released until February.
In July, Revenue had predicted that state property taxes would decline by $121 million in 2014 -- the first drop in a decade -- as communities took millions of dollars in local aid from the tax bill and passed at least some of it along to homeowners.
Some communities -- including Minneapolis and Dakota County -- are planning property tax cuts in 2014. But other communities, battered by recession and budget cuts, may opt to find other ways to spend their windfall from the state.
"We're going to have to wait and see what the cities and counties do," said Revenue Commissioner Myron Frans. "Some cities and counties are really trying to return some of this money for property tax (breaks) and some are fixing potholes and other things."
The November numbers are preliminary and the state won't have the final property tax numbers until the communities lock in their 2014 rates. Until then, Frans said, the state is encouraging local governments to pass at least some of the tax savings along to homeowners.
"Between now and then, the state is "encouraging them to look hard at their budgets here in the next three or four weeks," Frans said, "and use the money that we provided ... to reduce their levies if they can."
The early numbers show 2.1 percent property tax increase among Minnesota cities, 1.5 percent among counties and 2.1 percent among townships.
Minnesota school tax levies were set to decline by $60 million in the coming year, Frans said, but voters approved another $120 million in school levies.
"I'm still optimistic," Frans said. "The key for us is, we're watching these preliminary numbers, we want to make sure the cities and counties take a careful look and make sure we use the tools we gave them to...do what they can to provide property tax relief."
Those tools from the state included provisions in the tax bill that eliminated $129 million worth of sales taxes to cities and counties; $130 million worth of increased aid to local governments and increased aid to schools.
Communities will report their final property tax levies to the state in December and those numbers will be announced in February