The Free Press, Mankato, MN

Local News

November 29, 2011

Tax shifts by state showing up at local level properties

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.

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