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Report shows rural property taxes rising fast

ST. PAUL -- Property taxes outside of the Twin Cities are rising faster than for those in the state's largest metropolitan area.

Taxes to be paid this year are up an average 3.1 percent in the Twin Cities, a Minnesota House report shows, but for others the increase is 8.7 percent.

Increases reach the double digits for rural townships, cities in taconite mining areas and Duluth.

The average increase in north central Minnesota, including Beltrami, Hubbard, Cass and Clearwater counties, was 9.7 percent.

Democrats say the increases prove Republicans failed when writing the state budget last year, but the House GOP tax chairman said DFLers are using "funny numbers."

When broken down by type of property, utilities statewide average a 14.6 percent increase, farmland payments are up 11.4 percent and those who own apartments for low-income Minnesotans face 11 percent higher property tax bills. Also, regular apartments' property taxes are up 8 percent and small businesses will pay 7.4 percent more.

Overall, Minnesotans will pay $413 million more in property taxes this year than last year, the nonpartisan House research office reported.

Rep. Paul Marquart, DFL-Dilworth, said the report shows higher taxes that can be blamed on last year's elimination of the Market Value Homestead Credit. The Republican-controlled Legislature and Democratic Gov. Mark Dayton agreed to eliminate the credit last summer as they prepared a two-year budget.

Eliminating the credit basically cut the amount of state money flowing to local governments.

Beltrami County Assessor Duane Ebbighausen said Thursday that the county lost 7.1 percent of its tax base with the removal of the Market Value Homestead Credit.

"When they eliminated this homestead credit, it shifted the tax burden on to higher value homes and other property types," Ebbighausen said. "It didn't hurt lower value homes."

Property taxes for mid value homes in Beltrami County rose 2.6 percent. As market value gets higher, the tax rate increases.

The tax increases took many legislators by surprise, although Marquart warned about the consequences more than once during the past legislative session.

House Taxes Chairman Greg Davids, R-Preston, said Marquart is using out-of-date figures. The numbers House researchers used are from early tax plans by local governments, but many of them lowered their tax askings late last month.

Besides, Davids said, the market value program only was scheduled to spend $89 million. So, he added, it is impossible to blame $413 million in tax increases on eliminating that program.

Davids said many local government officials, who control property tax rates, have done a good job of keeping taxes in check. Marquart said Republicans blame local officials for tax increases, while Davids and his party are at fault for cutting money sent to local governments.

"GOP leaders and lawmakers who supported this measure must now stop shifting the blame to local governments or distancing themselves from the truth about property tax increases and start working with their local communities," said Marquart, the top House DFLer on property tax issues.

Davids said that the market value credit will not be restored, but he does want to reduce statewide business property taxes, a move he said could especially help small businesses in rural areas.

The tax chairman said that he will promote a bill to cap property taxes, unless the public votes to raise them.

Pioneer reporter Ben Karkela contributed to this article.

Don Davis reports for Forum Communications Co.