Property tax now serious ballot issue
Guest Editorial, Forum Communications Co.
Published Tuesday, October 17, 2006
As we listen to legislative candidates this fall, priority issues tend to focus around health care reform, education funding and transportation. But the underlying choice nearly all candidates embrace after their priority is property taxes.
Studies in recent days show that property taxes squarely belong on the table, and that the Legislature is to blame, not local governments.
There's no doubt property taxes have gotten out of hand. The Star Tribune, in an analysis of property taxes published in its edition Monday, shows residential property taxes rose an average 58 percent between 2002 and 2006, nearly three times the 21 percent average gain in personal income during that same period. The same can be said locally. (We couldn't find comparable numbers, but from 2000 to 2004 Hubbard County's residential property taxes rose 64 percent while personal income rose 18 percent.)
The Star Tribune theorizes the cause centers on three changes in state tax law, namely the 2001 reduction of taxes on commercial property which shifted directly to homes, the 2001 decision to have the state pick up school costs but then froze aid to schools the following years and forced schools to cut spending or go back to local taxes and the 2003 cut made to homestead aid to many cities because of the deep state budget deficit. Friday, the non-partisan League of Rural Voters (LRV) issued its own property tax study which shows higher property taxes as a direct result of state cuts to cities, schools and counties.
Using the same four-year period, LRV says state aid to school districts has been cut by $709 million, a 9.9 percent decline, and Local Government Aid to cities was cut 30.9 percent. As a result, property taxes have grown almost entirely due to cities and school districts replacing state aid cuts and not because of additional spending at the local level.
School property taxes have increased by $443 million or 38.3 percent statewide, and statewide city property taxes are up by 35.1 percent, LRV said. Even with higher property taxes, local government revenues have declined in real dollars per capita by 5 percent. Counties, too, are affected despite the state takeover of court administration costs. Total revenue to counties during the four years dropped 9.5 percent, far greater than the decline in state revenue. More costs have shifted to counties, such as incarcerating short-term felony offenders and a mandate to pay 10 percent of Medical Assistance costs for extended nursing home stays for people under 65.
"We've heard more than one politician claim that higher property taxes are the result of excessive spending by schools and local governments, but the facts do not support this position," says Niel Ritchie, LRV executive director, adding that local tax increases have not kept pace with the lost state revenues to schools and local government, often resulting in budget shortfalls. "People are paying more and getting less."
We hope all candidates this fall, regardless of party, are on the same page. At the current pace, property tax - one of the state's three major taxes that include income and sales - is the only one on a steady upward climb, and it's the tax least tied to one's ability to pay. And that's just plain wrong.
THE BEMIDJI PIONEER
