Following changes to tax credit, fingers wag

Counterpoint

As a new member of the Legislature, I'm continually amazed by the ability of those in the political establishment to shape their arguments on a topic depending on the time of year or the audience.

This week's example comes from lobbyist Keith Carlson of the Inter-County Association on the subject of changes to the Market Value Homestead Credit program ("Counties' tax plea: It's not our fault," Nov. 6).

The program was put in place to offer property tax relief by having the state "reimburse" cities and counties for property tax deductions credited to homeowners.

Homeowners saw the credit on their property tax statements and assumed the state would provide the reimbursement to their city and county.

Lately though, the state has not been living up to its end of the bargain. The last few years, it has promised hundreds of millions in property tax relief but has paid out only $89 million to counties and cities.

The 2011 Legislature and Gov. Mark Dayton put an end to this shell game and replaced the Homestead Credit with a Market Value Exclusion, providing direct property tax relief to homeowners.

This weekend in the Star Tribune, Carlson warned that "taxpayers are almost certainly going to be confused about who is responsible for this ... and where to focus their ire."

His quote struck me because it represented a complete turnaround from comments he (and other local government lobbyists) made to the Tax Conference Committee on May 9:

"I do particularly want to reiterate the comments that some of the city testifiers have already made that we're very pleased with the changes that are being made with the Market Value Credit changing that to an exclusion."

So which is it: A proposal that deserves the public's "ire," or one that deserves the support of local governments?

Myth No. 1 is disproved above -- local governments and their well-paid lobbyists actually supported these changes.

While the state planned to spend $261 million on this program in the budget forecast, in reality cities and counties received only $89 million from the credit program for the last two years.

In other words, the state's books look $261 million better, but the impact to counties and cities will only be $89 million.

But you must also consider that many cities and counties did not plan to receive any money from the program. So if they didn't plan to receive money, and didn't in fact receive any, why is that an excuse to raise property taxes?

One more myth -- that legislative changes are the only reason property taxes are increasing this year. Property taxes are increasing in Minnesota largely due to the falling valuation of homestead and commercial/industrial property.

Since property taxes are based on market value, local governments have had to increase rates in order to capture the same amount of revenue from a declining tax base, absent reductions in local spending.

The Legislature and governor made some tough choices to deal with a $5.1 billion budget deficit, and replacing the failed market value credit with a better market value exclusion program was one of them.

Maybe it's because I'm still in my first year in the Legislature, but it seems that local leaders and their lobbyists should stop the finger-pointing and stop laying blame and start laying a foundation where government does more with less money.

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