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Farmers hit with major land tax hikes

Some local farmers are in a state of shock after receiving their proposed property tax statements this weekend. One official with Kandiyohi County estimates next year's taxes to be 20 to 40 percent higher than last year. Tribune photo

People who own agricultural, seasonal or recreational lakeshore properties may have had a heart-stopper over the weekend when they opened their proposed property tax statements.

It wasn't unusual for those estimated taxes to be 20 to 40 percent higher than last year, said Kandiyohi County Assessor Tim Falkum. County Commissioner Dean Shuck said one of his constituents saw a 94 percent increase in taxes on a piece of property.

"There might be a little bit of a shock value," said County Administrator Larry Kleindl, during the County Board meeting Tuesday.

But Kleindl's message to property owners: Don't blame the county.

"This is not something the county did or the cities did," he said.

Instead, the sharp one-year increase is because the Legislature finally let a "limited market value" provision sunset.

Initiated in 1993, the law was meant to prevent huge tax increases from one year to the next on properties that were seeing rapid increases in their estimated market value.

The tax increases were kept in check by limiting the taxable market value of the property.

Since 2005, ag land values "have been skyrocketing," said Falkum, but the taxes have not reflected that.

Now, because the Legislature did not renew the law, those property taxes will be based on the full market value of the property and not on the "limited market value."

"I've had more complaints in the last few days than I've had in the last seven years," said Shuck, a farmer who has seen his own property taxes increase more than 30 percent. "Farmers are pretty irate."

Property owners had been warned about the death of the limited market value.

"This is really no surprise," said Commissioner Harlan Madsen, also a farmer. "We knew ag land was escalating, and we knew the limited market value was coming off."

Madsen blames, in part, the limited market value for vaulting farmland prices into the stratosphere by making it a cheap investment for speculators. He said farmers willing to pay high prices for land should be willing to pay the taxes.

"Maybe we weren't paying our fair share before, but we thought we were," said Shuck in a later interview.

When it comes to taxes, someone's gain may be another person's loss. In this case, farmers and recreational landowners will be paying more in taxes next year, but many residential property owners will be paying less.

"It's a shift," said Madsen.

Commissioner Richard Larson said farmers have gotten a break for years while residential taxpayers have carried more than their share of the burden. Now that weight is being adjusted and "the residential properties get a break."

The payable 2010 taxes reflected in the recent estimated property tax statement will be a one-time jump, said Falkum. From now on, all properties will be taxed at the full market value and will be subject to the normal tax fluctuations.

Commissioner Richard Falk said not all of the increases were because of the change in law. He questioned the accuracy of some of the assessors hired by townships to put the market value on lakeshore properties.

Because objections to property values are handled in April when the commissioners meet as the Board of Adjustment, Falkum said there really is no recourse for people who object to the tax increases.

The public is invited to voice comments on the county's budget during the Truth-in-Taxation hearing at 7 p.m. Dec. 1. Questions and comments about market values and property taxes, however, are not on the agenda that night.