ST. PAUL, Minn. - While Minnesotans were fixing their eyes on the three-week government shutdown, they may have missed a detail in the compromise that ended it.
The Homestead Market Value Credit - a $261 million pile of money set aside each year for property tax relief - is gone.
In its place legislators and Governor Dayton agreed to a new system that excludes a percentage of a home's value from property taxes, up to $414,000. A sliding scale favors homes with lower valuations.
"If your home is $76,000 or less then it's roughly 40 percent of your market value that is being excluded from tax," explained Ken Rowe, a manager in the taxpayer services department of Hennepin County.
But as Rowe points out, that only tells part of the story. That's because homeowners will win or lose under the new system largely based on the community in which they live.
If, for instance, your city has a lot of offices and large businesses - as a homeowner you'll get a break. In cities like Minneapolis and Bloomington, property taxes can be shifted to apartment houses, office towers and factories, off-setting homes.
On the other hand, if you live in communities like Crystal or Robbinsdale - cities with modestly valued homes but few large businesses - you are not in as good a place.
"Basically there's no other property that will absorb the taxes that will otherwise be paid by those homeowners and that tax burden is going to fall right back on homeowners in those bedroom communities," said Gary Carlson, director of intergovernmental relations for the League of Minnesota Cities.
Then there are communities like Wayzata - with lots of higher valued homes. Wayzata homeowners didn't get much property tax relief before and won't get much help under the new system either.
"Keep in mind that the major feature of what is happening here, at least from the state's perspective, is they're withdrawing a quarter-of-a-billion dollars from the property tax system and this money is going to be used for other things, not for property tax relief," said Carlson.
So what kind of numbers are we talking about? Researchers for the Minnesota House of Representatives applied the new system to last year's numbers and found property taxes statewide would have spiked by an additional 3.3 percent under the changes.
The simulation showed property tax increases would have ranged from a high of 6.7 percent in Southeastern Minnesota towns, to a low of 1.6 percent in southeast and southwest Hennepin County.
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