If you’re a homeowner or landowner, I have some good news for you: The Department of Revenue announced recently that property taxes are expected to increase at a significantly lower rate than they have over the past three years.
According to the Department, property tax levies will increase an average of 3.5 percent statewide if proposed local tax levies are adopted later this year. This compares to last year’s increase of 5.6 percent and an average increase of 6.9 percent during the past three years.
One item of note: There is a “special levy category” where municipalities can violate the tax cap in order to pay off debt. This is why many folks in Wabasha County are seeing projected increases on their tax statements, as the county needs to pay off the $23 million that is being used to construct and operate a new criminal justice center.
The revenue department notes that along with the impact of the global recession, one of the top reasons for the lower tax rate is the property tax cap that was approved in 2008. For years, Minnesota House Republicans and Governor Pawlenty advocated this cap as a way to control property taxes, and now homeowners and landowners are seeing the benefit.
Specifically, the property tax cap limits property tax increases by counties and cities with populations over 2,500 to the lesser of inflation or 3.9 percent. This year, the cap is 0.8 percent. Special levies for debt, public safety and certain other costs are not subject to the cap.
The proposed increase is based on maximum levy amounts proposed by local governments in advance of annual Truth-in-Taxation hearings, which begin next week. If those hearings result in a decrease in proposed levies, the projected growth will be even smaller.
While this is welcome relief, we still have work to do, as growth within Minnesota government is still outpacing the growth rate of family incomes.
To help curb this trend, we need to continue finding innovative ways to eliminate redundancies between units of government, as well as waste, fraud, and abuse. A good place to start would be with the elimination of many local government mandates, which would actually allow the locals to reduce spending on their own and operate more efficiently.
But most importantly, we need to truly prioritize government spending. This means government cannot and should not try to be all things to all people. It’s time for personal responsibility to reemerge and for government dependence to end in order to allow our freedoms to survive. Capping property taxes is a solid start, but we have a long way to go if state government wants to be more responsible to Minnesota taxpayers.