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State Representative Patti Fritz
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-8237
For more information contact: Sandy Connolly 651-296-8877
NEWS COLUMN
HOUSE PLAN WOULD PROVIDE FIRST PROPERTY-TAX CUT IN YEARS
It is no secret to property owners across the state that their property taxes have gone up dramatically over recent years. In fact, since 2003, property taxes have increased by $1.7 billion, and if nothing is done, they will increase by another $600 million next year. These increases are direct result of the cuts that have been made to Local Government Aid (LGA), county aid, school funding and the homestead credit.
The most troubling thing about property taxes is how regressive they are – they hit seniors living on a fixed income, young families just starting out and small businesses the hardest. We have older people in our community who could face the choice of whether or not to keep their homes or buy food and prescription medicine -they can't afford another property tax increase.
Last week, the members of the House DFL Property Tax Relief Committee unveiled their plan to provide significant and permanent tax relief to Minnesota homeowners, as well as increase the fairness of our tax system. This legislation is an important step forward in returning balance to the state property tax system, which has spun out of control in recent years.
One component is increased LGA, which towns and cities use to fund local improvements, such as roads and infrastructure, as well as police and fire departments. This bill would provide the city of Faribault with just over $627 thousand in additional LGA next year. Blooming Prairie will receive an additional $19 thousand, Medford will receive almost $56 thousand, Ellendale will receive just over $60 thousand and Morristown will receive $31,500 in additional LGA funding.
The plan includes $133 million buyback and indexing of School Levy Aid. As the result, the Faribault School District would see a total decrease in levy of almost $710 thousand and Blooming Prairie's levy decrease would be just over $108 thousand. In addition, the Medford School District levy would decrease by $234 thousand, Waterville-Elysian-Morristown's levy will decrease by $178,551 and the New Richland-Hartland-Ellendale-Geneva School District would see a levy decrease of just over $155 thousand.
One other source of additional revenue provided under this plan is County Program Aid. Rice County will receive almost $189 thousand and Steele County will receive an additional $126 thousand.
The legislation also includes a component designed to build more fairness into the tax system. Under the new Homestead Credit State Refund, if a person's property tax bill is more than 2% of their income, they will get a certain percentage of the amount over 2% refunded to them, based on income. This provision will provide $223 million in direct relief to Minnesota homeowners.
This proposal offers $543 million in property tax relief, and instead of the projected 8.9% property tax increase next year, the average Minnesotan will see a property tax cut of 3.4%!
To pay for this decrease, the bill creates a 4th tier of income tax, with every dollar of new money going directly into property tax relief. This plan will affect couples who earn $400 thousand or more, after deductions, and single earners who make $226 thousand, again after deductions. Approximately 81% of the 4th tier will be made up of Minnesotans who earn $1 million a year or more.
According to the Minnesota Department of Revenue's tax incidence report, the highest earners in our state are actually paying a smaller percentage of their income in taxes than the middle class. Specifically, by 2009 the richest 1 percent of Minnesotans, those making more than $1 million a year, will pay 8.9 percent of their income in state and local taxes. By contrast, those who make between $34 thousand and $52 thousand will pay 12.5 percent in total state and local taxes. This bill will bring more fairness to Minnesota's income tax system.
The question really becomes, how do we pay for the services Minnesotans value the most? We need a progressive tax system that does not place an undue burden on young families just starting out, seniors on fixed incomes or small businesses. I believe when Minnesotans consider the options, they will agree this plan creates more tax fairness, while at the same time offers a benefit to every property owner in the state.
Please contact me if you have any questions about this, or any other issue. I can be reached at (651) 296-8237, 551 State Office Building, 100 Martin Luther King Blvd., St. Paul, MN 55155 or via e-mail at rep.patti.fritz@house.mn.
News Items
- STATE REP. PATTI FRITZ PARTICIPATES IN START OF LEGISLATIVE SESSION - (Posted: Jan 9 2013 3:32PM)
- Rep. Fritz: Homeowners, Farmers Need Property Tax Relief - (Posted: 2012-05-01 00:00:00)
- Rep. Fritz: Let’s Vote on a Bonding Bill that Benefits All - (Posted: 2012-04-19 00:00:00)
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