NORTH MANKATO — The owners of a $150,000 home in North Mankato will have to send $114 less to Nicollet County in 2012 than they did in 2011.
They’ll pay $44 less to the city of North Mankato and $13 less to Mankato Area Public Schools, too. They’ll also have to send a few cents less to the Region Nine Development Commission and to the area housing authority.
Add all those up, and it’s $172 less in taxes going to those governmental units. But look at the real bottom line, and the owners of that middle-class home are facing a $63 increase. That’s the Alice in Wonderland impact of changes made in Minnesota property tax law at the State Capitol last summer.
Less is more. And the owners of modest homes are the ones that are doing best under the elimination of the market value homestead credit by the Republican-controlled Legislature and Democratic Gov. Mark Dayton.
When the Legislature suggested eliminating the credit, saving the state $260 million a year, it created a new market value homestead exclusion — which greatly reduced the taxable values of low- and mid-valued homes. A $76,000 home, for instance, is taxed as if it’s only worth $45,600.
In most cases, the exclusion largely protected average homeowners from the steep increase in property taxes that the elimination of the credit would have wrought.
But it also shifts the tax burden to other types of property — higher-valued homes, stores, factories, farms and apartments.
Take Nicollet County’s tax levy, which is headed up 1 percent under the County Board’s most-recent budget plan — $15.73 million in 2012 compared to $15.57 million this year. Because of the exclusion, those North Mankato homeowners would pay the county $677 next year — $114 less than this year.
The county, though, is collecting $160,000 more in taxes next year. So somebody needs to pay for that $160,000, plus the $114 break the North Mankato homeowners are getting and the similar break that hundreds of other homeowners are getting from the exclusion.
The fast-growing value of farmland is shifting the tax burden onto farmers in many cases, said Nicollet County Auditor Bridgette Kennedy.
“In the rural areas, it’s the high values in the ag land that offset that market value exclusion,” Kennedy said.
In the cities, the tax burden shift goes to any of the non-homesteaded property that didn’t see a big decrease in assessed value.
“They’re going to be picking up a bigger portion of the pie,” Kennedy said.
In the case of Nicollet County and the Mankato school district, the pie itself isn’t growing much. Nicollet County set a preliminary tax levy increase of nearly 3.5 percent in September but has since trimmed it to 1 percent, the amount reflected in the accompanying chart.
“They’ve been working continuously since September on paring that down,” Kennedy said.
The Mankato Area Public Schools levy is up 2.5 percent.
“We’ve tried to hold the line on that,” said Jerry Kolander, the district’s director of business affairs.
Budget decisions at the Capitol largely determine local school levies, and state assistance is actually reduced if districts don’t levy the expected amount.
“Schools are penalized if they under-levy on a certain component,” Kolander said. “They take away some state aid.”
The rise in the school’s levy, which climbed about $440,000 to $17.8 million, was eased by the district’s population growth. Community Education aid from the state is calculated at $5.42 per capita, and this year is the first time the formula will be based on the 2010 census and reflect the 63,382 people who now live in the district — up from 53,639 in 2000.
The city of North Mankato initially set a levy hike of 7.5 percent, reducing it to 7.02 percent last week (the amount reflected in the chart). The rising levy there follows a zero percent increase in 2011, when the City Council was counting on much more state aid than the city ultimately received or will receive in 2012.