The complex truth behind the political spin on property taxes
Taxes can be complicated. That was the case earlier this week, when a report on property taxes from the Minnesota legislature's House Research Department became something of a rallying point for the state's Republicans, with many coming out saying that the report, and its projections for property taxes over the next two years, clearly shows an attack on the middle class.
Minnesota GOP Rep. Matt Dean has been especially vocal on Twitter, writing in a tweet on Wednesday that, "The bullseye was stuck on greater MN & suburban families. They raised their taxes plain & simple."
Even Senate Republican leader David Hann got in on the act, saying in a statement: "The next time you hear Governor Dayton and the Democrats say property taxes are going down, don't believe their election year rhetoric. For the second year in a row, property taxes are going up. If the governor really wanted to make home ownership more affordable for people, then he shouldn't have raised taxes on Minnesota families by $2 billion."
But oddly, it wasn't just the GOP celebrating. The left also praised the report, with the House DFL Caucus writing on its Facebook page that "A non-partisan House Research report released today shows property taxes will drop by $49 million in 2014. This is the first decrease in property taxes since 2002! The DFL-led legislature made direct property tax relief a priority in our budget, enacting $177 million in direct property tax relief in 2013-14."
So are property taxes going up or down? And does it really matter? To get to the bottom of it, we turned to the actual author of the nonpartisan report, House Legislative Analyst Steve Hinze, and had him explain who's right.
As it turns out, it all depends on how you look at the report, and specifically, a few property tax relief bills that Governor Dayton signed into law over the past year or so. In total, the bills gave about $175 million back to taxpayers in property tax refunds, cutting their bill significantly.
(Click over to page 2 to find out more.)
If you add those millions into the calculations for 2014 taxes, then yes, property taxes fell by about $49 million. If you ignore that one-time boost in cash from the state, though, taxes went up. That's where the confusion lies. But for 2014, the point is this: Taxpayers will save some money on property taxes.
But here's the thing: Either way you look at it, property taxes aren't something that you can really pin on who's in charge. Instead, Hinze said, it more comes down to economic and demographic factors, like inflation or increased student populations. Those tend to lead to growing budgets for cities, counties, and school districts every year, which then lead to higher property taxes to pay for them. So even if property taxes increase, like we're expected to see in 2015, that's not unusual.
"And these years are normal," Hinze says. "You normally get some kind of growth each year, around 2 and a half or 3 percent. That's what we're seeing."
So for homeowners, this is nothing new. Property taxes are business as usual.
But people should also remember that projections are just that -- projections. Hinze says that while some of the numbers for the report are concrete, there are some far-off estimates too, and we won't know the final tally until late 2015. Of course at that point, no one will likely about 2014's numbers anymore.
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