Property tax burden dropsPublished 10:46am Friday, April 18, 2014
Homeowners may see a 12 percent property tax credit — provided they file for it.
That’s the message Matt Entenza, founder of Minnesota 2020 and a former DFL candidate for state governor, is traveling around the state to share.
“It will be real money, a real check,” Entenza told The Journal Monday.
Because of a nearly 41 percent cut in Local Government Aid over the past 14 years, property taxes have gone up, he said.
The state provides LGA to Minnesota cities to maintain essential services such as fire and police, and hold property taxes down.
Coupled with drops in per pupil funding for schools, homeowners were hit with property tax increases in recent years, he said.
To offset the tax increases and because there is a surplus in the state coffers, the Legislature put additional money into homeowner rebate programs.
“There will be a reduction in taxes in 2014,” Entenza said, “It will come as a rebate from the state. Homeowners and renters will have to file for it, or they won’t get it, and it requires an additional form. It’s good news for property owners.”
Fergus Falls property owners may see about a 12.6 percent reduction in their tax obligation over last year, amounting to an average difference of about $160. On average, taxpayers paid $1,269 in 2013 and can expect to pay about $1,109 this year, Entenza said. The amounts were figured on the average property tax paid by residential homeowners before the new homeowner property tax refund, and calculated by dividing the aggregate tax paid by the number of homesteads.
The refund was based on the gross average tax and the average household income calculated from the American Community Survey data.
That Fergus Falls didn’t see huge increases in taxes says something about how well the city managed the LGA cuts, Entenza added.
More good news is the Legislature has no plans to make big cuts in aid this year, he said.
The higher taxes hit seniors and those temporarily struggling because of the economy, causing additional hardship, Entenza said. The rebate will offer those people some relief because it is based on income and targets the middle class, he said.
Commercial and industrial property and apartments will also see a moderate tax reduction, he said, though they won’t see rebate checks.
“But for a change, the trend is (taxes) are going down,” Entenza said.
Farmers won’t likely see any relief because ag land values are spiking so fast that property taxes are increasing as well.
Even better news, Entenza said, is that the state is moving away from property taxes as a funding source and moving toward funding through income taxes, which are based on a person’s ability to pay.
Otter Tail County Auditor Wayne Stein said that residents may not see the 12-percent figure because so many factors affect the property tax rate in Fergus Falls and Otter Tail County, such as levies, land classifications and property values, for example.
“Overall, the tax capacity rate has decreased about 5.6 percent in the city of Fergus Falls,” he said. “But each tax district is affected by a number of variables, though some factors apply to all districts.”
What that means is after all the factors affecting tax rates are calculated, some property taxes may see a different percentage of increase or decrease, he said.