Saint Paul, Minnesota — Today, the Minnesota Department of Revenue released new information showing property taxes are projected to decrease for the first time since 2002, thanks to the new state budget. Increased aid to local governments, sales tax exemptions for cities and counties, and direct property tax refunds for hundreds of thousands of homeowners and renters included in new state budget are projected to decrease property taxes next year by an estimated $121 million, or 1.5 percent.
“After a decade of property tax hikes hurting families and businesses, this is great news for people in our area,” said State Representative John Ward (DFL – Baxter). “This property tax relief will put more money in the pockets of middle-class Minnesotans and help our local economy and community.”
“For the first time in a decade, Minnesotans are going to see property tax relief,” said State Representative Joe Radinovich (DFL – Crosby). “The new aid, refunds, and credits in our budget will help families and businesses all around our area that have been forced to deal with repeated property tax increases over the years. This property tax relief is great news and long overdue.”
In total, the DFL Budget provides over $300 million in middle-class property tax relief for Minnesotans through the Homestead Credit Refund, retooled renters’ credit and increased aid to counties, cities and townships.
In 2014, the Homestead Credit Refunds will increase by $117 million. Under this program, more than 300,000 homeowners (75% of filers) will see an average refund increase of $212. More than 137,000 additional homeowners will be eligible for a refund.
The previous Legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit. The new budget enhances the Renters’ Credit, providing property tax relief to Minnesota renters (including elderly and disabled renters), so that the neediest renters see the greatest benefit. Under the improved Renter’s Credit, 66,000 filers will see a bigger refund, 10,000 additional renters will qualify, and the average renter will see their refund increase by $179.
The new budget increases Local Government Aid by $80 million, County Program Aid by $40 million, reinstates $10 million in township aid, and provides a sales tax exemption for local governments, allowing them to collect less in property taxes from their residents. This change will provide property tax relief for Minnesota homeowners and renters by reducing local government expenses by an estimated $172 million.
Since 2002, property taxes have gone up 86 percent, placing a huge burden on the middle class. Those increases were due in large part to repeated cuts in aid to local governments, and cuts in direct property tax refunds for Minnesotans. In fact, between 2002 and 2013, County Program Aid was cut by 39 percent, and Local Government Aid was cut by 25 percent – putting pressure on local governments to cut services and raise property taxes.
As a result of the 2011 budget, statewide property taxes increased by $365 million, or 4.5%. An 8 percent increase fell on Greater Minnesota.
A second report from non-partisan House Research found that statewide property taxes are projected to be $181 million (2.1%) less than they otherwise would be if the legislature kept the budget passed in 2011 by the Republican-led legislature in place.
Regional property tax reductions due to 2014 DFL budget*:
Statewide -$181,311,000 -2.1%
Greater MN -$98,667,000 -3.0%
North Central Cities and Towns -$8,258,000 -2.5%
(includes part of Crow Wing County)
Taconite Cities and Towns -$3,821,000 -1.6%
(includes parts of Crow Wing and Aitkin Counties)
East Central Cities and Towns -$2,084,000 -0.8%
(includes parts of Aitkin County)
* These figures do not include the additional $135 million in direct property tax relief programs like the new Homestead Credit Refund or expanded Renter’s Credit.
A statewide map with the regional breakdown categories is attached.
Source: House Research Tax Simulation Report #13D3, 7/24/13
http://www.house.leg.state.mn.us/hrd/issinfo/csim13D3.pdf
Reps. Ward and Radinovich encourage constituents to contact them with any questions, comments, concerns, or ideas on any legislative topic. Rep. Ward can be reached by phone at 651-296-4333 or by email at rep.john.ward@house.mn. Rep. Radinovich can be reach by phone at 651-296-2365 or email at rep.joe.radinovich@house.mn.