ST. PAUL – Two studies are showing that actions taken by the 2013 legislature will soon be paying dividends for hundreds of thousands of Minnesotans.
Non-partisan House Research and the Minnesota Department of Revenue each issued reports that show property taxes will go down next year for the first time in more than a decade.
I pledged to take action on skyrocketing property taxes. We in Northern Minnesota know only too well the toll these property tax hikes have taken on our personal financial situations. In just 2011 alone, after the Homestead Tax Credit was eliminated, property tax burdens increased 8% for rural homeowners – a rate three times greater than the metro area.
Minnesota has made incredible progress since then. The study by House Research gives the best overall picture of property taxes, examining anticipated property tax levies, as well as changes to direct property tax refunds, in order to determine overall changes to property tax totals for Minnesotans in 2014.
The report found:
· Homeowners will see the most significant decrease. Overall, homeowners will see a $161 million decrease in property taxes in 2014, a 4.9% decrease from 2013.
· Small businesses will see a net property tax decrease in 2014 of 2.1%.
· Renters will see a net decrease in property taxes of 0.1%.
· Non-homestead ag-land will see a property tax increase of 12%. Notably, market value for ag-land increased by 24%.
· The Minnesota Department of Revenue reports that overall property taxes will drop in 2014 for the first time in over a decade.
· Direct property tax refunds are expected to increase by $133 million in 2014. Nearly 500,000 homeowners and renters will see increased refunds.
· Property taxes are going down despite a significant number of voter-approved education levies. Eighty-six percent of the operating school levy referenda passed in 2013, or 51 of 59 school districts. That is the highest approval rate recorded by the Minnesota School Board Association. The total increase in school levies for 2014 was $119 million.
If you scratch the surface, there is even better news for homeowners and small businesses.
Some are taking shots at this good news, jumping on the fact that the overall property tax levy is increasing by $124 million. But those people aren’t telling the entire story.
First, $75 million of the levy increase (60%) comes from new construction for homes and businesses – a development that should fuel optimism for the state’s economy.
Second, even without taking refunds into consideration, homeowners will see a $46 million drop in property taxes (1.3%). Greater Minnesota homeowners will see the majority of those reductions ($30 million). Small businesses will see a drop of $6 million. These figures do not include the additional $133 million in direct property tax relief that will benefit over 400,000 homeowners, so in fact, property taxes will be even lower.
And most importantly, the levies alone do not account for the $133 million in new direct property tax relief passed last session. More than 300,000 homeowners will see a property tax refund increase. More than 100,000 additional homeowners will be eligible for a refund. And the average Minnesotan will see their refund increase by $212.
I encourage you to see if you are eligible for the Homestead Credit Refund or Renter’s Credit. Some of you who may not have been eligible in the past may be eligible this year due to expanded refunds and credits. You can find more information on eligibility and how file for your property tax refund at the Department of Revenue website.