Republicans eliminate homestead credit – property taxes will increase

In a few weeks, Minnesota property taxpayers will receive their truth in taxation statements with an estimate of how much they will pay in property taxes the following year. This will be the last year you will see the Homestead Credit–money to help keep your property taxes down. This credit has been eliminated because the Republican majorities in the House and Senate voted to get rid of this important tax saving program. And the bottom line is your property taxes are going up. So much for “No New Taxes!”

What’s more troubling is that in this tough economy, this short-sighted decision will also cause our small businesses to pay a lot more in property taxes. According to non-partisan legislative research, business property taxes in Taconite Cities will increase by 7.2 percent. What’s even worse is that homeowners will get hit with a whopping 11 percent property tax increase. So much for “No New Taxes!”

This is a direct result of Republican legislators voting to end the Homestead Credit program that gives tax breaks to homes valued at less thank $414,000. Republicans had this provision in their first tax bill that was vetoed by Governor Dayton; however, Republicans insisted on keeping it in the final solution which will result in your property taxes going up. So much for “No New Taxes!” No Democrats voted for this change.

A new program called the “homestead market value exclusion” takes its place but this new program doesn’t put a dent in the increases homeowners, renters and especially our local businesses will see in higher property taxes. In fact, in rural Minnesota cities will be forced to increase levies.

In our delicate economic recovery, increasing property taxes on homeowners and local businesses is just plain dumb. To make matters worse, rural Minnesota gets hit with three times the property tax increase of wealthy metro areas. Area businesses get hit with higher property tax increases of six times more than businesses in the metro area–this is not a sensible way to grow jobs in our economy.

In addition to cutting the Homestead Credit, Republican leaders cut more than $275 million in local government aid (LGA). It’s estimated that $.50 of every dollar the state spends on aid to local governments goes toward keeping property tax levies down. This LGA cut will lead to additional property tax increases for all property taxpayers. So much for “No New Taxes!”

Republicans are quick to blame any property tax increases on local governments. But the truth is that year after year money from the state that pays for critical services has been cut. According to non-partisan legislative analysis, property taxes on business, renters and homeowners will increase significantly because of the tax law policies Republicans pushed through. So much for “No New Taxes!”

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Senator David Tomassoni
David Tomassoni represents District 6, which includes portions of Itasca and St. Louis counties in the northeastern part of the state.

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