New Non-Partisan House Research report: More evidence that Minnesota property taxpayers were hurt by removal of Market Value Homestead Credit

Over $400 million in new property taxes have Minnesota property owners reeling. While the range in local property tax increases across the state is wide and deep, a new non-partisan report provides even more evidence as to why property taxes payable in 2012 soared while property values plunged. The data also shows that rural Minnesota property owners were hit much harder than their metropolitan area counterparts.

“The new non-partisan House Research Department simulation report on property taxes (#12A3) clearly outlines the impact of the state tax policy change that eliminated the Market Value Homestead Credit. You may recall, it was the Republican Majority that insisted on getting rid of the Market Value Homestead Credit rather than raising a dime of income taxes on millionaires,” stated Rep. Paul Marquart.

The new report compares proposed property taxes payable in 2012 to property taxes payable in 2011 including any levies approved by referendum in November 2011.

Below are some key statewide findings:

• The average property tax increase is 5.2%

• The average agricultural property tax increase is 11.9%

• The average apartment property tax increase is 8%

• The average small business property tax increase is 7.4%

While the statewide findings are troubling – it is the greater Minnesota homeowners and businesses owners who bear the brunt of the property tax increases. Greater Minnesota property owners will pay 62% of all new property taxes this year.

• The average total greater Minnesota property tax increase is 8.7% -- an impact almost 3 TIMES more than the average metro total

• The average greater Minnesota residential homestead property tax increase is 5.2% -- an impact 5 TIMES more than a metro homeowner

• The average greater Minnesota business property tax increase has an impact of almost 2.5 TIMES more than a metro business

The most egregious double-digit property tax increases in greater Minnesota are:

• The total average increase for the Duluth area is 10.3%

• The small business average increase for East Central Minnesota cities is 11.7%

• The residential home average increase for South Central Minnesota towns is 10% with an increase of 23.6% for higher-valued businesses (over $150,000)

• The higher-valued business (over $150,000) average increase for Southeast Minnesota towns is a jaw-dropping 25.7%

The report findings put to rest any doubt about the real impact of the Homestead Credit’s removal. The case is closed. It is indisputable – steep local property tax increases are due to the Homestead Credit elimination.

“GOP leaders and lawmakers who supported this measure must now stop shifting the blame to local governments or distancing themselves from the truth about property tax increases and start working with their local communities. Our property taxes are now the highest in state history totaling $8.4 billion – and our seniors on fixed incomes, families, farmers, and small businesses are hurting because of them,” said Rep. Marquart.

Rep. Lenczewski stated, “I am hoping that the 2012 legislature will work harder to live within its means, rather than taking away people's homestead credit. The homestead tax credit is one of the only tax breaks that suburban residents receive and sadly some legislators decided to take it away. I am asking all legislators to join me and Rep. Marquart in bringing back the homestead credit.”

House Research Simulation Property Tax Report #12A3: http://www.house.leg.state.mn.us/hrd/issinfo/csim12A3.pdf

Rep. Marquart is the former House Property Tax Division Chair and the current DFL Lead.

Rep. Lenczewski is the former House Tax Committee Chair and the current DFL Lead.