Local officials blame state for higher property taxes.
A big property tax change soon will hit home for taxpayers, and county governments have a message for their constituents: "It's not our fault."
Expecting taxes to go up for most property owners, six of the seven metro counties say they are sending fliers out with tax statements to help taxpayers understand why. They say responsibility lies with legislators and the governor, who made a key change in the property tax system as part of a July deal to close the state's $5 billion budget deficit.
"Taxpayers are almost certainly going to be confused about who is responsible for this ... and where to focus their ire," said Keith Carlson, executive director of the Minnesota Inter-County Association, who helped draft a sample message. "The math doesn't add up in the traditional way of doing things, because even if every local government froze their levies, there would still be a tax increase for the majority of taxpayers."
Property taxes are changing because of the repeal of the well-known Market Value Homestead Credit, formerly provided by the state to subsidize property taxes of those who own and occupy lower-priced homes. Eliminating the credit saved the state $260 million next year and helped close the budget gap.
To keep property taxes down on homes with lower values -- but at no cost to the state -- officials created a "market value exclusion," which shrinks the portion of market value that is taxed for qualifying homes under $413,800. That helps some homeowners by shifting a greater share of the tax burden to higher-priced homes and commercial, agricultural and industrial properties.
Property owners won't see the full effect of the change until the truth-in-taxation notices go out between Nov. 10 and 24.
And when taxpayers open the envelopes, counties hope the fliers they have stuffed inside will make it clear that a state policy change -- not the county, not the city and not the school district -- is responsible for higher taxes, Carlson said.
The proposed Ramsey County flier starts with a question: "How can my property value go down and my taxes go up?" It states later that: "The increase is not the result of any action taken by local governments ... Local governments cannot undo this state law change."
Dakota County's flier declares: "We're holding the line on spending, but your taxes may go up anyway." Washington County's flier gives four answers to the question: "Why is this change resulting in tax increases?"
The messages are important because people get the property tax bill from the county and "they think the county is the culprit," said Dakota County Board Chairman Joe Harris. "The agriculture people and business owners are in for a big shock when they get their truth-in-taxation bill."
Dakota County has held its budget increase at zero for the past three years and will again next year, Harris said. "It's pretty easy for me to say that, 'Hey, if your taxes are going up, it ain't because of me.'"
But Rep. Linda Runbeck, R-Circle Pines, chairwoman of the Property and Local Tax Division of the House Tax Committee, objects to the "old game of blaming the state." Cities and counties should instead be looking for new ways to save and be more efficient, she said.
"Thankfully some counties and cities are lowering their levies, which they should be doing," she said. "They need to reduce their levy to protect all their property owners" from the shift in the tax burden.
House Tax Committee Chairman Greg Davids, R-Preston, said: "With a $5 billion shortfall that we had earlier this year, did anybody really think nothing would happen?"
The property tax is the responsibility of local governments and many of them have reserves they can use to reduce taxes, Davids said.
Said Harris: "It simply amazes me how a state legislative leader can say they don't make any decisions at the State Capitol that affects property taxes."
With the shift in homestead credit in mind, Dakota and Washington counties have proposed no levy increase; Hennepin and Scott each proposed a levy increase of no more than 1 percent; Ramsey County has proposed a 1.7 percent increase, and two counties plan to lower their levies: Carver will drop by 2.2 percent and Anoka by a whopping 7.4 percent.
Anoka County is the only metro county that did not feel compelled to tuck a note on the change in the homestead credit in its truth-in-taxation notices.
Seeing the budget problems developing at the state level, Anoka County began early this year to work on reducing its levy, said Anoka County Board Chairwoman Rhonda Sivarajah.
"Our goal from the outset was that we would not be passing along those reductions from the state to our citizens because they are already struggling to make ends meet," she said. "For us to point the finger at the Legislature and the Legislature to point the finger back at us really doesn't accomplish anything."