Column: Guest Column, by Linda Runbeck and Greg Davids

Over the last few months, attention has been focused on changes to the property tax system. But fact has been mixed with opinion, which has led to misinformed government officials and citizens. We have been traveling the state talking to local governments and taxpayers about these changes. There have been a number of common misconceptions, a few of which we need to address.

First, and most importantly, the legislature did provide more property tax relief to Minnesota homeowners by strengthening the Property Tax Refund program. By increasing both eligibility and maximum refunds, we were able to give additional relief to more taxpayers. The PTR program, by giving direct relief to property taxpayers whose taxes are high relative to their income, is the most effective and efficient way of delivering property tax relief.

Second, we cured a problem of false representation to homeowners. The old Market Value Homestead Credit program, for most of the past decade, was a failed promise to homeowners. Homeowners received a credit on paper, and believed the state was reimbursing that amount to the local city and county to lower property taxes. But the state failed to reimburse cities and counties as it promised, and thus, the program was a sham, leaving cities and counties trying to explain. We decided to do the right thing and remove a program that was a fraud on the taxpayer as well as the cities and counties.

Third, we protected the homeowner in the event local governments would try to levy back the lost aid. Rather than providing a credit, property tax relief is provided by excluding a portion of the home’s value from tax liability. This exclusion provides a similar amount of relief as the credit and will provide permanent, ongoing tax relief to homeowners.

To be clear, property taxes do not have to go up because of this change. Local governments can choose to reduce their spending, just like the state did. When Washington cut back the amount of money it was giving our state, we could have simply raised taxes to make up for it and kept on spending. We chose instead to pare back spending to a level we can afford. Local governments can do the same. In fact, many local governments have responded by renewing efforts for more efficient new ways of delivering services. They deserve credit for coming up with new, innovative ways to deliver services.

Finally, local government organizations supported the change. The Association of Minnesota Counties, Inter-County Association and the League of Minnesota Cities all supported this change. In particular, they were pleased that LGA (Local Government Aid) was maintained as a need-based program for cities. Also, because the Market Value Homestead Credit program was a failed program, they agreed the change was a big improvement.

Moving forward, we will continue working to provide direct property tax relief to Minnesota taxpayers. Our recent proposal to reduce the state business property tax and further increase PTR is another example. Putting money back in the pockets of hard-working Minnesota citizens and job creators is the best way to get our economy moving again.

More transparency in budgeting decisions will make local governments more responsible to their citizens. Citizens need to hold their local governments responsible for their spending decisions, and now they can. Reforming government is challenging for everyone involved, but it is a course which must be pursued, and we are committed to making it happen. The greater property tax relief, transparency and responsibility brought on by the 2011 changes will benefit all Minnesotans for years to come.

 

State Rep. Greg Davids (R-Preston) is the chairman of the Minnesota House Taxes Committee, and State Rep. Linda Runbeck (R-Circle Pines) is the chairwoman of the Minnesota House Property and Local Tax Division.