Real Estate Marketing & Beyond
There’s a shift going on in Minnesota, and businesses will soon feel the brunt of it.
Earlier this year, in an effort to balance the budget, the Minnesota Legislature repealed the “market value homestead credit.” This credit, created in 2001, allows owners of homestead property the advantages of paying a lower tax bill, without doing serious harm to city budgets. Cities recover the shortfall in revenue from the state, albeit many times local governments never receive full payment for monies owed.
Minneapolis businesses could end up paying higher property taxes. Image courtesy of Matti Mattila
This change could mean that individuals owning non-homestead properties, such as businesses, rental homes and apartment buildings in cities and counties like Oakdale and Washington County will feel the brunt of the changes in the form of higher property taxes.
Kevin Corbid, director of Washington County Property Records and Taxpayer Services offers a sobering forecast. “It [the changes] will likely make the tax rates go up, and when you take those higher tax rates on these non-benefited properties, that’s going to lead to some increased tax burden on those properties. It doesn’t give the county any more revenue than we had before, we’re just getting it from other places.”
As a safeguard to protect homeowners from the obvious tax increase after the new law becomes effective in 2012, the taxable values of homestead properties will be reduced, shrinking the tax base.
Adding to the budget woes of both Washington County and Oakdale is the fact that neither have been receiving all of the monies they’ve been due from the state. According to the League of Minnesota Cities, during the years 2003, 2005, 2006, 2008, 2009 and 2010, payments made to the cities were short the entire amount due.
The Minneapolis Legislature will repeal Market Value Homestead Credit. Image courtesy of rpeteg
According to Deputy Washington County Administrator, Molly O’Rourke, the county will receive only $1.3 million from the state in 2011 - a far cry from the nearly $3.4 million allocated.
Oakdale shares the same fate as Washington County. The 2010 financial report for Oakdale showed that although reimbursements for the program to the tune of $500,000 were due for the year, the city received nothing. As for 2011...”Oakdale is likely to lose the same amount in 2011,” said Oakdale Finance Director Suzanne Warren.
Craig Waldron, City Administrator shared his thoughts at the Oakdale City Council workshop on Tuesday, July 26, “It used to drive us nuts, because we levy for it and then we don’t get paid and the state was supposed to make up the payment for us and they never did.”
At the Oakdale City Council August 9 meeting, members will discuss the tax change issue. The results of their decisions could mean area businesses and other properties without a homestead designation could face higher taxes.
