ST. PAUL, MN – This week, the Minnesota House DFL majority unveiled a $250 million property tax relief package. It includes direct property tax relief to northern Minnesota homeowners and renters, and modernizes the local government aid distribution formula. Up to one million Minnesotans will see direct, targeted property tax relief under the proposal.
“The property tax hikes we’ve seen over the past decade have disproportionately hit middle class families in northern Minnesota,” said Rep. Anzelc. “This property tax relief package is long overdue. We’re going to get folks some relief so they have more money in their pockets to buy groceries, school supplies for their kids, and other goods from local businesses.”
Last year, the GOP-controlled Legislature eliminated the Homestead Credit, causing property taxes to increase by $370 million statewide. Perpetual budget cuts have caused Minnesotans’ property taxes to increase by 86 percent since 2002.
The House DFL plan offers direct property tax relief to middle class Minnesotans by providing $157 million in funding for the Homestead Credit Refund.
Under the Homestead Credit Refund:
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More than 300,000 homeowners (75% of filers) will see an increase in their property tax refund.
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More than 100,000 additional homeowners will be eligible for the refund.
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The average homeowner will see their refund increase by $212.
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A grand total of 636,000 homeowners will see direct property tax relief.
In addition to providing middle class homeowners with a refund, the DFL proposal includes $15.5 million for the Renter’s Credit, a refund that provides direct property tax relief to low- and middle-income renters.
The previous legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit and renters saw their property taxes increase by an average of $87. The new proposal enhances the Renter’s Credit by increasing the maximum refund allowed for renters. 66,000 filers will see a bigger refund and a total of 340,000 renters will see property tax relief through the Renter’s Credit.
“After years of more and more economic hardship for middle class families, I’m pleased that we’re on track to end the status quo of cuts and gimmicks that harm Greater Minnesota,” said Rep. Anzelc. “This property tax relief package is going to make a positive impact on the livelihoods of hundreds of thousands of hard-working people.”
The House DFL is also proposing the most significant Local Government Aid (LGA) reform in over a decade, including $60 million for LGA, $28 million for County Program Aid, and an updated distribution formula based on needs.
Under this proposal, the city of Grand Rapids would see a $229,306 increase in LGA. The aid distribution formula is meant to provide cities with state aid when their essential needs exceed the amount that they can raise in property and local taxes. Many Greater Minnesota communities have faced severe LGA cuts in recent years, forcing them to cut back or eliminate vital city services such as police officers and firefighters.
“Northern Minnesota has been hit hard by painful cuts to local government and county program aid,” said Rep. Anzelc. “Property taxes for Greater Minnesotans have increased eight times more than in the metro area, and Greater Minnesota business taxes have increased three times more. We cannot expect our communities to thrive when faced with these unpredictable increases.”
The House DFL’s property tax relief package updates Minnesota’s LGA formula to make it more stable, easier to understand, and more predictable. The new formula is need-based, meaning it provides the most aid to communities with the greatest need. Giving cities and towns a more stable source of aid will allow them to better plan financially and sustain or expand local services such as police, fire, and infrastructure.
“Northern Minnesotans should be pleased to know that the House DFL majority is on their side when it comes to property taxes,” said Rep. Anzelc. “We’re putting the middle class first. It’s time to get our people some relief. We’re going to get the job done.”