Property taxes on the rise for most in St. Paul

After two years of savings, the owner of the average St. Paul home can expect a 7.3 percent property-tax increase in 2015 — if current tax plans stand.

Break down the projections by neighborhood, and the potential for pain becomes downright acute, particularly in the Greater East Side, where the median-valued home is in line for a 27.6 percent tax increase.

Officials with the city, school district and Ramsey County who met Monday to hear the neighborhood-by-neighborhood projections note that the East Side hikes follow years of savings owing to sharp reductions in property values that finally are rebounding.

Still, local leaders are bracing for calls from taxpayers who see eye-popping numbers on Truth in Taxation statements — projections for the coming year sent to individual property owners statewide in November.

What homeowners can expect to learn in reply is that much of the increase is due to shifts in tax burden and other factors outside city, county and school district control.

"It's going to be an interesting year," said Chris Samuel, property records and revenue manager for the county. Tax shifts, he said, "are toughest for us to explain."

Typically, property owners are not privy to the combined impact of city, county and school tax proposals this early in the Truth in Taxation process.

The infusion of revenues from that fiscal disparities pool is one example of how a factor outside a local government's control can benefit taxpayers. In recent years, St. Paul homeowners also have seen tax bills lightened by commercial-industrial properties taking on a greater share of the tax burden — a situation that's been reversed for 2015. That is because home values are rising — the median-valued St. Paul home had an 11.1 percent market value increase — while commercial values are about flat.

Some people mistakenly believe that an 11.1 percent increase in a property's market value produces an identical 11.1 percent tax increase. But myriad factors go into individual tax calculations.

When levies are set by local taxing jurisdictions, it creates a fixed amount that is divided among individual property owners, including not just residential parcels, but commercial-industrial properties, too, among others. For homeowners, tax bills vary from one house to the next, with differences driven primarily by market values. If one home's value rises more quickly than others, that homeowner is vulnerable to a bigger tax increase.

Differences surface from neighborhood to neighborhood, too.

In Highland and Macalester-Groveland, two of the city's larger neighborhoods, individual home values remained so strong over the past seven years that 4,791 residences in Macalester-Groveland and 4,648 in Highland saw property-tax increases in at least five of those seven years — despite the mortgage meltdown that hit cities hard in 2008. Those residences represent 75 percent of Macalester-Groveland's housing stock and 71 percent of Highland's.

On the East Side, the two biggest tax increases, percentage-wise, would be the 27.6 percent for median-valued homes in the Greater East Side, situated in the northeast corner of the city, and 18.7 percent in Dayton's Bluff, which is the neighborhood just east of downtown. In those areas, however, values fell during the past seven years, and savings were more common. A home in the 1900 block of Hawthorne Avenue E., for which Samuel provided projections Monday, is expected to be hit with a 41.9 percent tax increase. But that follows reductions of 13 percent in 2013 and 24 percent in 2014.

Listening to the presentation, Mayor Chris Coleman said that such a dramatic swing can pose other issues for homeowners trying to maintain control of their finances.

"It's kind of hard to budget," he said.