Tuesday, September 20, 2011

Thanks Commissioner. Commissioner Brenda Cassellius gets a double thank-you for (1) appearing at our SEE general membership meeting last Friday and doing a great job sharing her insights with us, and (2) for writing a great opinion piece in Sunday's St. Paul Pioneer Press. As everyone knows by now, the fact that some school districts are seeking increased revenue through ballot questions this fall has raised the hackles of a few legislators who believe (sincerely) that enough revenue was delivered to school districts in the 2011 omnibus education funding bill that districts should not need to seek more revenue.

As I wrote on the blog last week, there are a lot of reasons to dispute (politely) the assertions of these legislators and I'm not going to re-hash them. It was great to see Commissioner Cassellius weigh in on the issue as well in her opinion piece. I am especially appreciative of the line near the end of the piece where the Commissioner writes: "Minnesota's Constitution requires the state - not local school boards - to provide a "uniform system of public schools through taxation or other means." That constitutional mandate for uniformity is threatened as the quality of a child's education is growing increasingly dependent upon which zip code he or she lives in, the property wealth of that community, and the district's ability to pass a levy."

Thanks once again Commissioner!

More Property Tax Consternation. One of the hottest items of discussion since the end of the legislative session deals with the elimination of the homestead credit and its replacement with a homestead market value exclusion. The homestead credit was based on a calculation made at the state level that went directly to local units of government in the form of an aid against local property taxes. While separate from local government aid, it achieved a similar purpose in holding down local property taxes by supplying local units of government with state revenue. The homestead credit was first slated for phase-out and eventual repeal as part of Governor Ventura's "Big Plan" passed in 2001, but subsequent Legislatures extended the date of repeal. This year, the Legislature acted to finish it off. This was part of the initial tax bill that found its way to the Governor's desk and was vetoed and there is some verbal wrangling going on between the branches of government over whose "fault" this is.

Due to the elimination of the homestead credit, property taxes will rise by an estimated $261 million for Pay 2012. Where the increased burden will fall has not yet been calculated, but it will hit business property throughout the state harder than residential property, as the new homestead market value exclusion will take some portion of home value off the property tax rolls and pushing relatively more burden onto business property. The bottom line is, however, that everyone's property taxes will be going up and it will be a result of legislative action and not that of local units of government. It will be Christmas in November when those property tax notices hit the mailboxes!

Laurie Blake from the Minneapolis StarTribune outlines the policy change in this article. Needless to say, higher property taxes is just about the last thing that's needed in local units of government where the property tax sensitivity is already high. Stay tuned. I'll fill you in as more details become available.

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