Commentary: Elimination of credit leads to higher taxes for property owners
It's that time of year again. Truth-in-Taxation statements are arriving in the mail. These statements detail your property taxes for the following year. This year's statements will provide a bit of a shock: Due to the elimination of the Homestead Credit by the Republican majority, property taxes are going to increase for folks in northern Minnesota, even if local levies do not increase.
I wanted to take this opportunity to offer some information on the Homestead Credit, what it means for property taxes in our area, and why I voted against its elimination.
The Homestead Credit reduces the property tax burden for 95 percent of Minnesota's homeowners through a targeted credit that shows automatically on our property tax statements. Prior to its elimination, anyone with a home valued at $414,000 or less received the credit. The average credit for 2011 was $202, while the maximum credit was $304.
Throughout the regular session and special session, the Republicans repeatedly proposed eliminating the Homestead Credit in their budget. Gov. Dayton vetoed the elimination during regular session, but after this summer's long, unfortunate government shutdown, the elimination of the Homestead Credit made it into law.
Northern Minnesota is likely going to take a big hit from the elimination of this credit. Rural Minnesota homeowners receive 55 percent of the state's Homestead Credit and nearly 60 percent of the $270 million in property tax increases will be shouldered by rural Minnesota. Folks in our area have been squeezed enough in recent years, and many -- especially those on fixed incomes -- can't afford higher property taxes. Bemidji's city manager, John Chattin was recently quoted as saying, "Even without the city and county raising levies, property taxes will go up."
The change is also going to shift a greater property tax burden onto small businesses in our area. A business in Bemidji worth $300,000 will see its taxes go up another 8 percent. Property taxes are already the greatest burden for many small businesses in our state, and these increases will only make it tougher for our businesses to hire new workers.
Tax increases should occur when necessary and should be progressive in nature, where everyone pays their fair share. It is the unfortunate policy of the Minnesota House and Senate Republican leadership to protect the wealthy from paying their fair share and instead put more tax burden on people who can least afford it. They even refused a proposal that would have raised income taxes on millionaires -- only 3,900 Minnesotans.
I've signed on to a bill that would restore the Homestead Credit next year. I firmly believe that Minnesotans and Minnesota businesses need help, and need government to be a partner and supporter rather than a barrier to success. Clearly, millionaires have enough advocates in St. Paul. I will continue standing up for Minnesota families, seniors, small businesses, and a promising future for our children and grandchildren.
Persell, DFL-Bemidji, represents District 4A in the Minnesota House.