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Property taxes rise by 4.7 percent in 2012

ST. PAUL, Minn. -- Under the pressure of declining state aid, a tough economy and difficult choices about what to pay for, Minnesota's cities, schools and counties raised the burden on property taxpayers in 2012 by more than $300 million.

ST. PAUL, Minn. -- Under the pressure of declining state aid, a tough economy and difficult choices about what to pay for, Minnesota's cities, schools and counties raised the burden on property taxpayers in 2012 by more than $300 million.

As a result, the tax bill for property owners is rising by 4.7 percent to a total of $8.2 billion, according to the state Department of Revenue.

Many local officials did react to taxpayer unhappiness over early tax estimates by trimming their levies back by year's end. But in November, voters in some communities decided to approve higher school levies.

After local officials were forced to choose between raising property tax levies, cutting services or holding their tax levies flat, 50 of Minnesota's 87 counties raised their property tax levies. So did 465 of the state's 854 cities and 191 of the state's 336 school districts.

In the end, the vast majority of taxing districts raised the burden on local property owners. That's because the state has stopped reimbursing local governments for credits property owners received under the market value homestead credit.

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In past years, that money was counted as part of the property tax levy even though it was coming from the state, not local taxpayers. Local officials who kept their levies flat or even decreased them a little were still asking local property owners to make up at least some of the missing state reimbursement.

Many local leaders have complained about the increasing pressure on their budgets, partly a result of less state aid over the years.

But state Rep. Greg Davids, R-Preston, chairman of the House Taxes Committee, notes that the state had been failing to make those reimbursements for some time. He said some cities and counties took advantage of the situation last year and raised property taxes more than enough to make up for the loss of state help.

Preston has proposed limiting future city and county levy increases to 1.9 percent, with some exceptions.

He also has proposed gradually eliminating the state's property tax on commercial and industrial property and providing relief for homeowners and others hit hard by changes in property tax law.

As for a DFL proposal to bring back the market value homestead credit, forget it, Davids said, "It's not coming back."

At first glance, the total property tax bill of $8.2 billion looks like only a small increase over last year's $8.1 billion. But last year's tally included several hundred million dollars the state was supposed to pay local governments via the homestead credit reimbursement.

So the burden on property owners was lower than that in 2011, even if the state failed to fully pay its commitment.

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