Even modest property tax reform is a plus

  • Article by: EDITORIAL BOARD , Star Tribune
  • Updated: March 4, 2014 - 9:22 AM

Relief not as sizable as hoped, but help goes where it’s most needed.

As many previous statehouse politicians learned to their sorrow, local property taxes are hard to control from the Capitol. That reality has hit home to the DFLers in charge of the Legislature and the governor’s office.

They thought they set the table in 2013 for noticeable reductions in property taxes around the state. Instead, they got mixed results and a muddled message. Total K-12 school and local government levies are up $125 million this year, giving Republican politicians the chance to crow that the DFL’s tax-suppression strategy failed.

But DFLers also engineered an increase in property tax refunds for both homeowners and renters, distributed on an income-based formula to low- and middle-income taxpayers facing high tax bills. Factor in estimated claims for the richer refunds, and net property taxes in 2014 are down slightly from 2013 — by $8 million, or 0.1 percent. (A separate analysis by House Research found a $9.5 million decrease after credits.)

Count this page among those hoping for a bigger break. It seemed doable because state lawmakers raised income and tobacco taxes in order to ease the squeeze on schools and local governments. School funding saw a $485 million boost over two years, while cities and counties were granted a sales tax exemption worth $250 million more.

But count us too among fans of the $133 million boost this year in refunds to qualifying taxpayers. The income-driven property tax refund and renters’ credit are well-designed programs that this year will reach an estimated 550,000 property owners and renters — up 140,000 from the number previously eligible.

That leaves plenty of Minnesota’s 2.1 million households staring at higher taxes again this spring. This is the 12th year in a row for increases in total property tax burdens, with yearly increases averaging $332 million.

But the credits are helping to stabilize housing for low-income Minnesotans by sending help to those whose property tax bills are high enough in proportion to their incomes that their ability to remain in their homes could otherwise be in doubt. The refunds may not stifle political criticism, but they’re sound policy.

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