Minnesota Senate Minnesota House of Representatives

State Capitol 100 Rev. Dr. Martin Luther King Jr. Blvd. St. Paul, Minnesota 55155

Sen. D. Scott Dibble

651-296-4191 sen.scott.dibble@senate.mn

Rep. Frank Hornstein

651-296-9281 rep.frank.hornstein@house.mn

Rep. Marion Greene

651-296-0171 rep.marion.greene@house.mn

November 8, 2011 Dear neighbor, If youre a homeowner paying the second half of your property tax bill this month, pay special attention to your statement. Many of you should notice a line called the Homestead Credit, a direct property tax relief program that lowers homeowner property taxes. Any home valued under about $414,000 automatically receives the credit. The maximum credit is $304 and the average credit is $202. Ninety-five percent of all homeowners receive this benefit. Wed like all residents to take notice of this special property tax relief now because next year, the Homestead Credit no longer will exist. The state budget fix that Republicans insisted on and voted for during the July special session and which the three of us voted against included an irresponsible decision to eliminate the Homestead Credit, meaning the property tax reduction you see on this years statements disappear next year. The Republicans replaced the Homestead Credit with a new scheme that will require cities and counties to factor a lower percentage of homeowners total market value when applying levies. This new program provides $0 in property tax relief, eliminating a program that provided $538 million in relief; it only shifts which property tax payers bear the burden expected to be homes that have increased or maintained their values, residential rental properties and commercial spaces that are increasing in value. Probably most upsetting is that unlike the old system, there is no guarantee that this new socalled Homestead Market Value Exclusion will result in lower property taxes for even one homeowner because the deduction no longer is applied directly to individual tax bills. Instead, many homeowners and business owners, commercial property owners, renters and owners of highly valued homes will see an increase in their tax bills next year as cities and counties are forced to spread their levies across more properties to make up for the artificially lowered tax base.

This is nothing but a bait and switch by Republicans trying to appear as though theyre keeping property taxes flat, but actually forcing them up by their very action. Its a sneaky way to once again push the states budget troubles onto property taxpayers. Minneapolis is just one of many cities proposing a zero percent levy increase for 2012, but the citys hard work at maintaining costs is for naught because of the Republican legislatures changes. Minneapolis is predicting at least 35 percent of residential homes in the city will see a city property tax increase of up to five percent in 2012, even though those homes have not changed homestead status, have not had any improvements, and fall under the citys 0 percent levy increase. We are especially dismayed that the tremendous property tax relief delivered from the hard won reforms on the Citys Police and Fire pension obligations, will be eroded by this action. Property taxes in cities and counties across the state will be increasing in the same manner even if local governments dont spend one additional dime next year, but simply maintain the current level of basic services. Its a simple arithmetic fact: raising the exact same amount from an artificially reduced base, absent the offsetting reimbursement from the state, means property taxes have to increase. And as is always the case when property taxes go up, some properties have to carry more of the freight if they have maintained their value better than others in the same jurisdiction. With a cut to the renters property tax credit of 13%, renters are hit twice. The three of us stood with our DFL colleagues to oppose this change in the first place. We fought for long-term solutions that wouldnt shove the states problems onto property tax payers once again, and were prepared to launch a similar fight in 2012. Democrats have proposed legislation for 2012 that would reverse this years decision and restore the Homestead Credit. Minnesota property taxpayers already are on the hook for more than $3 billion of Governor Pawlentys budget problems over the past decade. Theres absolutely no excuse for them to pay even more. Yours,

D. Scott Dibble Senator, District 60

Frank Hornstein State Representative, District 60B

Marion Greene State Representative, District 60A