City and county budgets have now been finalized across the state. As you know, local governments set property tax amounts and rates. Whether they go up or down depends on local spending decisions, housing growth and the city’s residential, commercial and industrial tax base.
While the liberals, and in some cases local officials, have made many attempts to blame the Legislature as the reason why you’re property taxes may be rising, these rates are set entirely by your local councils and commissioners. Remember, there’s always an option other than raising your taxes. They can cut spending.
As I reviewed the levies for communities in District 28B, I’m proud to report some of our local governments were prudent with their citizens’ tax dollars and cut spending for the upcoming year. Others did not. While looking at the numbers, I thought you might be interested to see how your locally elected officials, and those of your neighbors, fared this year while setting their budgets. Call it a levy report card.
Wabasha County led the way in fiscal responsibility. Having spent $12.023 million last year, it approved a new levy of $11.316 million, trimming more than $700,000 from its levy for a nearly six percent spending reduction. Winona County also deserves praise. It spent nearly $17.314 million in 2011, and eventually settled on a 2012 levy of $16.972 million. This is a two percent reduction, or a nearly $341,000 decrease in spending. Meanwhile, Goodhue County chose to increase its levy by more than $1 million over the amount it spent last year – for a total of nearly $26.687 million for 2012, a four percent increase.
Some of the naysayers will be quick to point out that the Legislature replaced the Market Value Homestead Credit (MVHC) with the Market Value Homestead Exclusion (MVHE). As the theory goes, cities had been depending on this state subsidy, and when it disappeared, they were left with no choice but to make up the difference by raising property taxes.
Two points: The MVHC was fully funded once in its ten years of existence. In 2011, while some communities were lucky to receive half of what they were promised in MVHC funding, most received substantially less.
Take a city like Zumbrota. It was slated to receive $103,354 in MVHC last year. Instead it received $36,422 – a loss of $66,932. The 2011 Adjusted Levy includes paid MVHC funds. With this in mind, Zumbrota’s 2011 revenues were actually $1.296 million, which is its 2011 certified levy minus its lost aid. This is shown in the below chart as “2011 Adjusted Levy.” As you can see, in every case, the cities increased their revenues for 2012 above what they had the previous year.
Look for your city below and see how you are impacted.
2011 Adjusted Levy 2012 Certified Levy Increase/Decrease
Altura $93,996 $103,000 +$9,004 (+9.58%)
Bellechester $26,375 $31,296 +$4,921 (+18.66%)
Elba $35,074 $37,338 +$2.264 (+6.45%)
Goodview $1,326,271 $1,361,739 +$35,468 (+2.67%)
Hammond $22,386 $24,800 +$2,414 (+10.78%)
Kellogg $196,776 $206,780 +$10,004 (+5.08%)
Kenyon $592,451 $657,011 +$64,560 (+10.9%)
Lewiston $596,463 $629,183 +$32,720 (+5.49%)
Mazeppa $289,106 $315,143 +$26,037 (+9.01%)
Millville $23,423 $25,000 +$1,577 (+6.73%)
Minneiska $9,057 $11,477 +$2,420 (+26.72%)
Minnesota City $24,408 $30,000 +$5,592 (+22.91%)
Pine Island $1,619,786 $1,704,402 +$84,616 (+5.22%)
Rollingstone $135,234 $149,000 +$13,766 (+10.18%)
St. Charles $737,510 $793,629 +$56,119 (+7.61%)
Stockton $105,515 $130,567 +$25,052 (+23.74%)
Utica $49,415 $56,000 +$6,585 (+13.33%)
Wanamingo $570,406 $575,000 +$4,594 (+0.81%)
Zumbro Falls $54,237 $68,705 +$14,468 (+26.68%)
Zumbrota $1,296,606 $1,476,657 +$180,051 (+13.89%)
The facts show that city levies were raised well above and beyond what was lost in MVHC. In all, cities in District 28B “lost” $449,198 in MVHC. This year, their combined difference between last year’s amount spent and this year’s certified levies total $582,232. That’s $133,034 greater than what was eliminated in MHVC payments last year. Local Government Aid subsidy reductions cannot be blamed either, as payments remain identical to last year.
As the chart above points out (statistics were provided by the Department of Revenue), each city made the choice to spend more this year than it did in 2011, and you are making up the difference. The reasons for increased spending will vary from town to town; and you’ll need to decide whether or not the reasons are worthwhile.
But as you review your property tax statements this year, know that if your taxes increased, it was not the result of any legislative action. Nothing prevents cities from doing what two counties in our area did; lowering their property tax rate to prevent an increase for homeowners. Instead, cities chose to raise them. Grade the work of your council and county board as you see fit.