It’s that time of year again when the Minnesota Department of Revenue drops nothing short of a love letter into your mailbox titled ‘Preliminary Property Tax Levies for 2016.’ For new homeowners or businesses, the letter’s contents may seem confusing or daunting.
What they are, essentially, is a list of preliminary maximum property tax levies that have been reported by local governments and passed by local school referenda, all of which happened Nov. 3.
Dr. King Banaian holds many titles, including former state legislator, research director, dean of the School of Public Affairs and is the president of the economic authority for the city of St. Cloud.
He described preliminary property taxes in one simple statement, “They are statements made to property tax holders that tell them what is likely to be their property taxes for the upcoming year.”
Communities learn through their preliminary tax levies what the plans are for their city, county and school board governments of their plans for spending for the upcoming calendar year.
Simply, the decisions made by local government on how much they are spending and what they plan to spend money on; their decisions can affect their cost of living for residents in the area.
An example of that would be the District 742 referendum not passing. No matter what the results are, that decision was going to affect property tax owners within that district.
In light of that, this year’s report’s average property tax for the state in cities, counties, townships, schools and special taxing districts all increased.
According to the Minnesota Department of Revenue,
Cities – The 2016 preliminary property tax levies for cities will total approximately $2.142 billion compared with $2.036 billion in 2015, a 5.2% increase.
Counties – The 2016 preliminary property tax levies for counties will total approximately $2.915 billion compared with $2.810 billion in 2015, a 3.7% increase.
Townships – The 2016 preliminary property tax levies for townships will total approximately $245 million compared with $239 million in 2015, a 2.4% increase.
Schools – The 2016 preliminary property tax levies for schools will total approximately $2.657 billion compared with $2.471 billion in 2015, a 7.5% increase. School preliminary levies increased $186 million. About half, $92.6 million was approved by voters in new and renewed referenda.
Special Taxing Districts – The 2016 preliminary property tax levies for special taxing districts will total approximately $353 billion compared with $334 million in 2015, a 5.6% increase.
These increases don’t look so good upon first glance, but Banaian assured that St. Cloud residents won’t be feeling the pain of these so much, as confirmed by Mayor Dave Kleis via email.
Kleis said, “As for St. Cloud, we’ve proposed lowering the tax rate for 2016. If it passes in December, property owners, who don’t see an increase in valuation, should see a slight decrease in next year’s city taxes. We are able to do this by capturing the growth in our overall tax base. That growth will allow us to hire additional public safety personnel next year to protect a growing community.”
Robert Abel, Chief Manager for RCA Real Estate in St. Cloud expressed his opinions as to why homeowners will not be feeling the increases.
“They pass the taxes with the hold on the residential and the homeowner, because that’s the greatest population, and they are looking for votes. They don’t want to alienate and irritate and tick people off, so they nail the businesses,” Abel said.
In owning a commercial business in St. Cloud, Abel said he will be directly feeling the effects of this year’s property tax increase.
“It’s affected other businesses and property owners’ personal income since 2007, and with the larger tax increases, that’ll continue,” Abel said.
“There were a few years when the recession first hit in 08’ and 09’ where [assessors] kind of reduced the rates, reduced the values,” Abel said. “Then they would increase the rates and reduce the values. So that eventually as the property started coming back to its real value, the rates just float right along with it – so it’s kind of like a gotcha. ‘Oh, we’re reducing the rates and increasing the value,’ well when the rates go up and the values go up, it’s a double whammy, and it’s by design- this is not accidental.”
Abel voiced his frustrations by saying, “The problem is, you try not to become too vocal and outspoken because it has another effect on you. Today, whatever we do discuss, if somebody doesn’t agree with it they put a monitor on it, if I don’t like the fact that there’s a certain amount of refugee immigration, I’m a racist. If I don’t like the fact that taxes are higher, I’m too conservative. Everybody tends to put labels and monitors on things, and all we’re trying to do is survive.”
In the end, Abel says he will see an effect on the property tax increase on commercial businesses and he believes that effect will continue.
“The only real outcome that can be positive is if the government and spending entities decide to hold the line,” Abel said.
The preliminary property tax levies are not yet set in stone for 2016, as both residents and local government will have the opportunity to gather and discuss their opinions on local spending and property taxes and the upcoming Truth-in-Taxation meeting coming up this December.
Property owners will receive a post-card that provides them information about the meeting.
Banaian said, “The boards will take that information shared and consider and likely refigure and recalculate your property tax because they will change their spending plans based on citizen input.”