St. Louis County, Duluth property taxes set for big jump

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• Tax changes on a $150,000 homestead

In the coming days, property owners across St. Louis County will receive truth-in-taxation statements. Here’s a word of advice: You may want to sit down before opening that envelope.

Among people anticipating some sticker shock and backlash is Duluth City Assessor Gregg Swartwoudt.

“We’re in line for a double-digit increase in property taxes next year,” he said.

If you own and live in a typical Duluth home, the truth-in-taxation statement you receive probably will project about a 9 percent increase in property taxes, but that doesn’t include the levy referendum passed last week. A parks and recreation levy approved by voters last Tuesday will add another 3.2 percent to property tax bills in Duluth, producing more than a 12 percent hike for most homeowners.

It could be worse. In Ely, truth-in-taxation statements project a tax increase of nearly 37 percent on homesteads next year. That’s in part due to a referendum voters passed last March for the installation of a new $3 million system to heat local school buildings.

The reason for the increases is the Legislature’s elimination of the homestead tax credit.

The state used to reimburse local governments for this credit offered to homeowners. In 2012, the state will stop that practice and will instead offer owners of qualifying homesteads a property tax exclusion, effectively lowering the taxable value of their homes but forcing across-the-board rate increases to make up for lost state revenues.

“Owners of homestead properties will still receive the benefit of the exemption, but it will be less of a benefit than they received under the credit, and other property owners will be left to pick up the differential,” said St. Louis County Auditor Don Dicklich.

In St. Louis County, the substitution of the exclusion for the credit alone is expected to raise taxes next year by 5.8 percent on homesteads, 8.2 percent on non-homestead residences, 8.3 percent on apartments, and 5.5 percent to 6.1 percent on commercial and industrial properties.

Some communities will be hit harder than others by the homestead tax changes, Dicklich said.

“It will have the biggest impact in rural Minnesota, where there’s not a lot of commercial property tax base,” he said.

Dicklich said he and his staff are ready for questions about changes in what was already a fairly complicated tax system.

“We’re expecting a little barrage of calls,” he said Tuesday. “The first batch of notices went out this morning.”

In Duluth, truth-in-taxation documents show about 45 percent of property taxes collected going to the county, 28 percent to the school district, 23 percent to the city and 4 percent to other special taxing districts.

In terms of projected property tax revenues for 2012, the city expects to collect 10.7 percent more than it did this year, the county will receive a 9.5 percent boost, and the school district will collect about 8 percent more.

These figures are all based on these bodies levying the maximum amount they’ve authorized. Dicklich said they are still at liberty to reduce their levies, if they so choose.

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