County looking for public input on taxes

Published 9:57 am Wednesday, December 7, 2011

Mower County property taxes have more than doubled since 2003, but there doesn’t seem to be any end in sight to tax shifts.

According to the 2010 audit, the county’s tax revenue increased from $6.7 million in 2003 to $14.7 in 2010, while federal and state revenue contributions dropped from $16.2 to $15.7 million over the same span.

This year, the county is proposing a maximum 7 percent tax increase, which would make for a $16.6 million levy.

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The levy was $15.5 million in 2011.

On Thursday, the public will get its chance to be heard on the issue, as the county will hold its Truth in Taxation meeting at 6 p.m. in the board room of the Government Center.

County Coordinator Craig Oscarson said the tax hikes stem from ongoing loss of state aid and continued state and federal mandates requiring county services, especially in Health and Human Services.

Oscarson said when the state cuts local funding, the county is forced to raise property taxes.

“The legislature is making a conscious decision that property taxes are the best way to pay for these things,” Oscarson said. “And I don’t think the public believes that. I don’t believe that. But that’s what’s going on.”

While the cost to provide services has risen, Oscarson said state and federal funds have been stagnant or decreasing.

“You’ve seen some reduction over time or, if nothing else, a leveling off, but you’ve seen a large growth in the programs,” Oscarson said.

That’s a trend that probably will continue.

On Monday, Democratic Gov. Mark Dayton predicted “big property tax increases this year and next” as counties struggle to make up for declines in state aid programs, even as property owners contend with the elimination of the homestead market value credit — a popular program that reduced most property tax bills.

Dayton told leaders of Minnesota’s counties Monday that he’s sympathetic to their financial difficulties, but promised no immediate relief.

Dayton called property taxes “the most unfair tax of all — you have to pay it whether or not you have a job or an income.” The Democratic governor said he’d like to lessen pressure on property taxpayers with income taxes that take more from wealthier earners — but said he wasn’t likely to make another big push for those changes until at least 2013, after the next legislative election.

Felt at home

The biggest proof that tax increases from the state are being felt at homes in Mower County is the loss of the Market Value Credit and creation of the Market Value Exclusion.

The Market Value Credit was repealed for homestead properties valued at less than $413,800, and it was replaced with the Market Value Exclusion, which reduces the taxable value of the homestead properties and shrinks the tax base.

For example, a homestead property’s value could be $150,000, but the exclusion would reduce the home’s taxable value by $23,740 to $126,260, according to the Minnesota Department of Revenue.

Oscarson said the switch from the credit to the exclusion is making for a difficult and confusing year for taxpayers, especially since the change will affect different properties in different ways.

“It’s going to be so confusing for the taxpayers this year, largely based on that exclusion, because it’s disproportionate on the market value exclusion based on your property value,” Oscarson said.

Across the state, the exclusion is expected to hit commercial properties and owners of high-end homes the hardest.

Locally, Assessor Rich Peterson said the effects have been varied.

Some homes saw a considerable increase in property taxes, but Peterson said much of that depended on location within the county.

“It really depended on the township, the city, the school district,” he said.

Despite the increase, Peterson said he hasn’t seen the rush of homeowners coming in one might expect.

A number of other factors are driving increases in the county’s budget. Human Services is on pace to outspend its 2011 budget by $500,000, largely due to out of home placements.

“You’ve got kids out there, for whatever reason, doing adult crimes,” Oscarson said. “The costs of those placements are extremely high.”

The county board is likely to budget for the increased costs next year and raise the budget, rather than paying the extra costs through reserves.

“Hopefully the public understands these are facts of life and someone’s got to pay the bill,” Oscarson said.

Despite increases in costs, Oscarson said the board is looking for ways to save wherever it can. For example, the board previously merged the Highway Department and Environmental Services into Public Works. The board is also discussing merging Health and Human Services.

“I think the board has been exhibiting some very conservative behavior and taking a hard look at areas we can deal with,” Oscarson said.

Oscarson said Mower County’s taxes have been comparable to other counties.

“Our board has been very thrifty over the years,” Oscarson sad.

—The Associated Press contributed to this report.