Editorial: Homeowners will pay for GOP ploy

It's an old ploy at the State Capitol: Cut aid to local governments, then voice shock and outrage when cities, counties, townships and school districts raise property taxes to compensate for the loss.

A brazen version of that accountability dodge is playing out this year.

The 2011 Legislature cut $261 million in direct relief to property taxpayers in 2012 by eliminating the 44-year-old homestead credit, which in recent years picked up a portion of the tax tab for homes with market values of less than $414,000.

Taking away that tax discount is a very near kin to raising taxes. Yet "no new taxes" Republicans were the authors of the change.

A tax bill including it was vetoed by DFL Gov. Mark Dayton in May. But when it returned in the shutdown-ending budget agreement in July, it was among the items Dayton said he "agreed to" but did not "agree with."

The customary dodge is now on display. Witness the arguments of Senate Taxes chair Julianne Ortman, R-Chanhassen, on the Opinion page. Local governments are not forced to raise property taxes because state aid is cut, she claims.

She might have added that the Legislature did the dirty deed for them. Absent mitigating action by local governments, this homestead credit maneuver will raise most Minnesotans' property taxes next year.

The latter move shrinks local tax bases. That means that local governments must raise tax rates if they want to simply stand pat on spending -- and when they do that, all properties are affected, not just homes.

If local governments want to spare their constituents a tax increase, they'll have to cut spending in 2012, in some cases dramatically. Zero increase won't do the job.

Some communities can rise to that challenge without great distress. But others are already straining to operate local services.

For them, the loss of homestead credit and the tax base exclusion that accompanies it bring real fiscal pain. Some will find it next to impossible to cut budgets enough to avert tax increases.

In a perversion of usual state policies, this change goes easiest on communities with big, diverse tax bases and falls hardest on places where low-value property predominates. Nearly 60 percent of the $261 million lost to local governments through the homestead credit elimination falls on Greater Minnesota.

That partnership has been good for the whole state, propping up the quality of local services and thus the quality of life statewide. But its biggest beneficiaries have been outstate communities with small tax bases.

Withdrawing state support from those needy communities in an economic downturn kicks them while they're down. It's the antithesis of shared sacrifice.

Last week, House DFL tax leads Ann Lenczewski and Paul Marquart called for repeal of the homestead credit elimination in 2012, although they didn't point to a better way to close the gap in the state budget that the repeal would create ($261 million in 2012-13; $539 million in 2014-15).

They should offer a clear alternative, and the choice that this would present for Minnesota's future should get a full airing at the Capitol and on the campaign hustings in 2012.

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