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State Representative Mary Franson
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-3201
For more information contact: House GOP Communications 651-296-5520
LEGISLATIVE UPDATE
News From Representative Franson
2012 property tax statements should be arriving in the mail, affectionately known as the "truth in taxation" statement it will tell you the size of your 2012 property taxes. Behind the scenes, it reflects a wake-up call to city and county governments. The message is this: The economy has stagnated. State revenues have slowed. Businesses, families and state government have made adjustments in reducing their spending and local government must do the same. There were a few factors that played into property tax statements this year.
Another legislator put it well saying, the fact is local government organiza¬tions supported this change. In the Sept. 23 Echo Press, the executive director of the League of Minnesota Cities, along with the Association of Minnesota Counties, stated they supported the changes.
To use their words, they “decided it was time to eliminate the recurring shell game and support elimination of the Market Value Homestead Credit program. This position was driven by a desire for more transparen¬cy and fiscal certainty.”
I agree with him and with the local government organizations.
During the 2011 legislative session, we had to plug a $5 billion hole in our budget.
The Property Tax Refund (PTR) program does not appear on your tax statement, but can reduce many homeowners final property tax burden and is applied for through your income tax filing process using the PTR form.
The second major factor, in a possible increase, is the declining market value environment. Property values declined across Douglas and Todd Counties. Just as lower property values would suggest a cut in state spending, so also do lower real estate values which may suggest cut in local government spending.
A third factor is the change to a Market Value Homestead EXCLUSION (MVHE) instead of the Market Value Homestead CREDIT (MVHC). Just as with the current credit, the purpose of the exclusion is to shield a portion of a homeowner's property from taxes --only the Exclusion does so by excluding a similar portion of "taxable" value. The formulas are the same for both the credit and exclusion. It must be pointed out that the credit was not a check sent to the homeowner; it was a check sent by the state to the city or county, a so-called reimbursement. Higher valued homes (above $414,000) and commercial industrial property will not get the benefit of the Exclusion nor did they receive the benefit of the former Credit. The "homestead" tax situation is unchanged.
Since 2003, the state had failed in 8 out of 9 years to pay the full MVHC "reimbursement". When the local government received less of the expected reimbursement, they either raised property taxes to cover the difference or cut spending. The state made promises it couldn't deliver, taxpayers thought they were getting a benefit but it was only passed on to them in the next year's tax bill and cities and counties were left trying to explain a budget hole. Moreover, there was no accountability or requirement that cities and counties detail how they spent some $261 million dollars each year sent to them via the MVHC program. All in all, a woefully underperforming program that needed to end.
The bottom line is that unless cities and counties reduce their budgets for 2012, property taxes will increase even without an increase in their levies. This will hit the commercial and industrial entities the worst. They do not get the benefit of the exclusion, but if budgets are not reduced they will bear the brunt of the property tax increase burden.
Douglas County increased their levy by 5.7 percent for 2012. Douglas County’s 5-year levy increase is 21% and they claim the 1-year increase ('11-'12) is 6%, but when you factor in that they levied back the lost aid, it's 8%. But even bigger is that property values are flat, so while property values have increased 1% over five years, the county levy increased 21%. Even cities are effectively raising levy amounts that are causing property taxes to increase. Long Prairie increased their levy by 7.5 percent this year and Alexandria increased by 4.5 percent. These dramatic increases will affect your property taxes, and contrary to popular belief state government has not forced their hand in this. If a local government entity does not reduce their levies to match what their actual resources were last year (levy plus any MVHC reimbursement), then they will actually be increasing the property tax burden on taxpayers.
Some will argue they have to levy back the lost reimbursement. Other local governments will work to prevent that. For example, Anoka County reduced their levy by 5.2% and their overall spending by 7%. Stearns County reduced their levy by 1%. This demonstrates that it is a choice of local government on what to do with a loss of revenue whether from net taxable market value or from a non-working state program.
The size and cost of local government must be reduced for if we are to avoid the unintended consequences of higher taxes in our district. Elected officials are finding new and more efficient ways to deliver services at lower cost – equipment purchase sharing, job sharing, digitizing record-keeping, or simply holding the line on wages and costly benefit increases, etc.
Sincerely,
Mary Franson
News Items
- FRANSON SWORN IN FOR SECOND TERM - (Posted: Jan 8 2013 5:26PM)
- News from Representative Franson - (Posted: 2012-04-05 00:00:00)
- News from Representative Franson - (Posted: 2012-03-23 00:00:00)
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