Letter: Letter doesn't tell whole story on property taxesThe year 2013 will be a big one for discussion of Minnesota’s property tax system, which means it’s pretty important for Greater Minnesota residents, businesses and legislators to have a clear view of where we stand and how we got here.
By: Bruce Ahlgren, Mayor, City of Cloquet, and President, Coalition of Greater Minnesota Cities, Worthington Daily Globe
The year 2013 will be a big one for discussion of Minnesota’s property tax system, which means it’s pretty important for Greater Minnesota residents, businesses and legislators to have a clear view of where we stand and how we got here. Unfortunately, Sen. Al DeKruif’s “statewide” understanding of property taxes doesn’t tell the whole story for folks in Greater Minnesota.
For starters, property taxes in Greater Minnesota rose 8 percent compared to 2.6 percent in the metro area from 2011 to 2012. In total, property taxes across the state increased by $370 million. Sen. DeKruif would have you believe this increase is due to local choices regarding property taxes. Here’s the news flash: the net increase in local government levies was only $56 million. The remaining $314 million is due to circumstances driven by the state. A total of $24 million comes from an increase in the state business property tax, and the remaining $290 million was from the elimination of the Market Value Homestead Credit (MVHC). It resulted in an increasing share of the property tax burden being borne by our farms and Main Street businesses.
In Greater Minnesota, our ag homestead land saw a 12.5 percent increase in property taxes and our commercial industrial properties saw increases of 6.2 to 7.3 percent, versus 2.4 to 5.9 percent in the metro. Clearly, the 2011 elimination of the Market Value Credit had a disproportionate impact on Greater Minnesota.
Sen. DeKruif also touts the addition of $30 million to the property tax refund program (PTR), which goes to individuals. Again, this state level view doesn’t tell what happened in Greater Minnesota. Of the $30 million in new money added to the PTR program, roughly two-thirds went to the metro area.
The long and the short of the 2011 tax bill was that Greater Minnesota received most of the bad and little of the good.
Finally, Sen. DeKruif notes that LGA payments to cities have been constant from 2010 through 2012. While he is correct in this assertion, he does not recognize the tremendous losses in LGA payments these communities have suffered in the preceding decade or the fact local government aid has not kept pace with inflation. For instance, had LGA kept up with inflation, the city of Worthington would have gotten almost $5 million in 2012 rather than $2.7 million.
Going back to where I started, 2013 will be a big year in terms of discussing property taxes. Whether they are Democrats or Republicans, Greater Minnesota legislators need to pay closer attention to how proposals will affect the residents, businesses, farmers and cities of their districts, not what their party wants.