July 30, 2013 ST. PAUL, MN – After more than a decade of continuous property tax increases, Minnesotans will benefit from property tax relief in 2014.
According to information released by the Minnesota Department of Revenue, property taxes statewide are projected to decrease for the first time since 2002.
Increased aid to local governments, sales tax exemptions for cities and counties, and direct property tax refunds for hundreds of thousands of homeowners and renters included in Governor Mark Dayton’s Budget which is projected to decrease property taxes next year by an estimated $121 million, or 1.5 percent.
“Without property tax relief, Minnesotans would have seen an increase in their property taxes next year – continuing a decade-long trend of rising property taxes,” said Revenue Commissioner Myron Frans. “Instead, when new local aids, credits, and exemptions are factored-in, along with increased refunds for homeowners and renters, we estimate property taxes will fall in Minnesota by $121 million.”
Since 2002, property taxes have gone up 86 percent.
Those increases were due in part to repeated cuts in aid to local governments, and cuts in direct property tax refunds for Minnesotans. Between 2002 and 2013, County Program Aid was cut by 39 percent, and Local Government Aid was cut by 25 percent – putting pressure on local governments to cut services and raise property taxes.
According to the new information released today by the Department of Revenue, between 2003 and 2013, property taxes went up every year – by as little as $92 million in 2011 to as much as $507 million in 2006.
Those increases in property taxes made Minnesota’s tax system more regressive, placing a higher burden on middle class families, senior citizens on fixed incomes, and small businesses.
The recently passed budget increases Local Government Aid by $80 million and County Program Aid by $40 million annually. The budget also reinstates township aid at a $10 million level.
Watonwan County Auditor Donald Kuhlman says the aid Watonwan County will receive in this new formulation increases from $499,197 this year to $511,198 next year.
City Manager Joe McCabe says St. James will receive an additional $232,109 next year. Government aid goes from $1,336,057 this year to $1,568,166 next year.
McCabe said the city was just beginning the process of budgeting for next year. He said some of the dollars may go back to residents as property tax relief, but the amount of the relief depends on what major medical insurance will cost the city and what new equipment purchases will cost.
Sales Tax Relief for Cities and Counties – The budget provides a sales tax exemption for local governments, allowing them to collect less in property taxes from their residents. This change will provide property tax relief for Minnesota homeowners and renters by reducing local government expenses by an estimated $172 million.
Page 2 of 2 - Property tax relief may be short lived, especially for farmers due to soaring land valuations. The county assessor’s office does an annual increase in property valuations at the start of the year. The dramatic increase in the price of farmland that has been sold in the county over the last couple of years means property tax assessments will be made from a much higher level.
Homestead Credit Refund – In 2014, Homestead Credit Refunds to homeowners are projected to increase by $117 million. Minnesota homeowners who received a refund last year will see an average increase in their refund of 27 percent. Over 137,000 more homeowners will now be eligible for this refund.
Property Tax Relief for Renters – The budget provides more property tax relief to renters by increasing funding for the Renter’s Property Tax Refund program. This program is projected to increase $23 million in 2014. Renters who received a refund last year will see an average increase of 25 percent in their refunds next year. Over 30,000 more renters will now be eligible for refunds in 2014.
Minnesota homeowners and renters may be eligible for a property tax refund. The deadline to apply for that refund is just a few weeks away. In order to file for a property tax refund, Minnesotans must complete their applications online or by mail by August 15, 2013. While the deadline to file is August 15, homeowners and renters have an additional one year grace period to claim a refund for 2013.
To find out if you qualify for a property tax refund, or to complete your application online, visit the Minnesota Department of Revenue website. http://www.revenue.state.mn.us/individuals/prop_tax_refund/Pages/Eligibility_Requirements_for_the_Property_Tax_Refund.aspx