One of the signature promises DFL candidates made in 2012 was to provide statewide property tax relief.
In 2013 we delivered $140 million in property tax relief directly to Minnesotans through changes to the property tax refund and renter’s credit programs. Because of those actions, more than 500,000 Minnesotans already have received or will receive additional property tax relief this year.
We also invested in our cities and counties again through County Aid and Local Government Aid. This is a proven way to keep local taxes low.
The success of those efforts were reflected in reports just issued by the non-partisan House Research and the Minnesota Department of Revenue. They show property taxes will go down next year for the first time in more than a decade.
The House Research report gave the best overall picture on property taxes. It examined both anticipated property tax levies, as well as changes to direct property tax refunds, in order to determine overall changes to property tax totals for Minnesotans in 2014.
Homeowners will see the most significant decrease, with a $161 million decrease in property taxes in 2014, a 4.9 percent decrease from 2013. Small businesses will see a net property tax decrease in 2014 of 2.1 percent. Renters will see a net decrease in property taxes of 0.1 percent.
Greater Minnesota homeowners will see a larger decrease in property taxes. Before refunds, they will see a 2.8 percent cut, compared to a 0.7 percent cut in the metro area. Remember, when Republicans were last in charge, it was Greater Minnesota homeowners that took the biggest hit. After the homestead credit was killed in 2011, property tax burdens increased 8 percent for rural homeowners - three times greater than the metro area.
It is true that the overall property tax levy is increasing by $124 million, but that is more the result of booming economy than any failed policies. More than half of that levy increase - $75 million - comes courtesy an increase in the construction of new homes and businesses. And even before refunds, homeowners will see a $46 million drop in property taxes.
But the most important point is that the levies alone do not account for the $133 million in new direct property tax relief passed last year. More than 300,000 homeowners will see an increase in their property tax refunds. More than 100,000 additional homeowners will be eligible for a refund. And the average Minnesotan will see their refund increase by $212.
That is real property tax relief, and it adds up to, for the first time in more than a decade, Minnesotans paying less in property taxes.
But we’re not done yet. I’m introducing a bill to raise the level of LGA even more, allowing cities to lower their levies again. And the DFL House has put on the fast track a package of tax cuts aimed at the middle class that would provide more than $500 million in relief. We’d do this by passing federal tax conformity, which would provide:
• $111 million for middle-income, married families by conforming to federal tax code to eliminate “Marriage Penalty”). More than 650,000 families will see an average tax decrease of $120.
• $36 million for working families by increasing the phase-out range for Working Family Credit to match Earned Income Tax Credit (EITC). More than 50,000 working families will see an average decrease of $300.
• $26.4 million for students and parents who paying for college and students paying off loans through education-related provisions, including qualified tuition and related expenses.
• $3.9 million for new homeowners through a deduction for mortgage insurance premiums. More than 80,000 new homeowners will see an average tax cut of $60.
• $7.2 million for homeowners who refinanced or had a short sale.
• $1.8 million for Minnesota families with dependents. More than 25,000 families with household incomes below $38,570 will see a $65 tax decrease.
• $400,000 for families adopting children. Employer-provided adoption assistance is excluded.
• $1.1 million for 60,000 teachers through classroom expense deduction for educators.
The state’s economy is recovering faster than most of the nation. We have hard-working Minnesotans to thank for that. I’m just glad that I, along with my colleagues, have fulfilled our promise to put a few extra dollars in the pockets of those hard-working folks.
Erik Simonson (DFL) is the Minnesota state representative for district 7B.
