Truth-in-Taxation property tax statements were mailed out to Stearns County residents. When those statements were received, property owners may have noticed an increase in their taxes because of state legislative action.
Legislative action this summer replaced the Homestead Market Value Credit with the Homestead Market Value Exclusion. The change was a budget saving measure by the legislature to save the state money and end a government shutdown.
The Homestead Credit provided state dollars to homestead properties for property tax relief. Changing the Homestead Credit to a Homestead Exclusion resulted in the elimination of $8.7 million in property tax relief for Stearns County taxpayers; this money will now have to be paid by property owners.
The Homestead Market Value Exclusion may provide less of a tax break to homeowners than the credit provided. The Homestead Exclusion is designed to provide some tax relief for homeowners by reducing a homes’ taxable value, but it leaves local governments with less taxable property value on which to collect taxes. This increases property tax rates for most government jurisdictions. It has also created a shift in who carries the tax burdens to properties that are non-homestead, such as agriculture and business properties.
Minnesota House research shows on average taxes will go up 4.7% across the state, taking into account no increases in levies. The impact of the homestead credit change in Stearns County will cause taxes to go up 4.5% overall, although the impact on each individual property owner will vary by location. Government levies for all jurisdictions in Stearns County (schools, cities, townships, etc.) are down nearly 1%. Stearns County has worked diligently to lower the county portion of your property taxes, decreasing its levies by 1.3% from last year.
When property owners receive their tax statement, they will notice their taxable market value has gone down. This does not reflect the market value of the home. It is the estimated market value minus any tax exclusion under the new law.
These changes are illustrated in the table below.
SAUK CENTRE CITY
| OLD LAW | NEW LAW | PERCENTAGE |
| 2011 | 2012 | CHANGE |
| Estimated Market Value | 150,000 | 150,000 | |
Market Value Exclusion | | (23,740) | |
Taxable Market Value | 150,000 | 126,260 | |
Class Rate | 1.00% | 1.00% | |
Net Tax Capacity | 1,500 | 1,263 | |
Tax Capacity Rate | 128.843% | 140.844% | |
Tax Capacity Tax | 1,933 | 1,778 | |
Homestead Credit | (237) | | |
Referendum Market Value | 150,000 | 150,000 | |
Market Value Tax Rate | 0.2420% | 0.2590% | |
Market Value Tax | 363 | 388 | |
Net Tax | 2,058 | 2,167 | 5.27% |
See a sample truth-in-taxation notice, which explains the notice line by line.