ST. PAUL, Minn. — Minnesota property taxes owed this year are mostly static once refunds and credits are factored in, state officials said Friday, despite their earlier prediction that those taxes would drop considerably.
A Department of Revenue analysis shows a net $8 million drop in a property tax system that generates $8 billion a year. That means the reduction is a slim 0.1 percent.
Here's where it gets complicated: Homeowners and businesses will pay a total of $125 million more in 2014 than they did in 2013. But $133 million in the new property tax refunds and credits will cancel out some increases for those who qualify.
Income-based refunds aren't automatic. Last year, slightly more than half of homeowners got a property tax refund. The average refund for those 341,000 homeowners was $796, according to the department. About half of renters also qualified for refunds averaging $592.
"A refund is a refund. It is actual money," Revenue Commissioner Myron Frans said in an interview. "The simple fact is property taxes statewide have gone down for the first time in over a decade. Those are the facts. There's no cooking the books."
Gov. Mark Dayton, Frans and legislative Democrats made a highly publicized prediction last summer of tax savings of $121 million after the Legislature boosted state allowances for schools and local governments. Those entities impose the lion's share of the property taxes people pay and they all will take in more than they did the year before.
Republicans accused Dayton and fellow Democrats of failing to deliver on a key promise, and said it was misleading to rely on refunds to get their figure into negative territory. Rep. Paul Torkelson, R-Hanska, focused on the $125 million in property tax obligations despite the extra money the state devoted to keeping levies low.
"In 2013, Democrats sent local governments $292 million in new money claiming it would lower property taxes," Torkelson said. "Despite Democrats' repeated promises to reduce property taxes, Minnesotans learned today they are facing the highest property tax levy in state history. Governor Dayton and Democrats set the target and they missed."
It's important to note that the value, location and type of property determine specific property tax bills. A homeowner in one part of the state could see an outright cut while someone in another town faces a rising bill. And even as a shaky housing sector deflated home prices, farmers have seen agriculture values boom and the related taxes climb.
Frans said there were some variables officials weren't counting on when they announced their projection in July. Among them is the high success rate schools would have in getting voters to back levy referendums.
"I'll be the first to admit we wanted it to go down even more and it's something we'll look at going forward," Frans said. "But it's a major step in the right direction."
House Speaker Paul Thissen, DFL-Minneapolis, said the report signals a stop to "skyrocketing property taxes" of the last decade.
"We made a different choice this past year — investing in direct middle class property tax relief and restoring the state's commitment to cities, counties and school districts," Thissen said in a written statement. "Now, we are seeing the positive results and lower property taxes for homeowners and small business."