DFL budget reduces property taxes

 Last week, Mayor Rybak delivered his final budget speech and announced some much-welcomed news: a proposal to cut Minneapolis property tax rates by 1 percent. 

If approved, it would be the first reduction in city levies since at least 1996.

According to a recent article from the Star Tribune’s editorial board, our Mayor credited the new state budget passed by the DFL-led legislature and signed into law by Gov. Mark Dayton for making his property tax cut proposal possible.

Here’s how:

First, our budget increases Local Government Aid (LGA) for Minneapolis in 2014 by nearly $12 million, a boost of over 18 percent compared to 2013. LGA helps our city pay for the kinds of vital services like police officers, firefighters, and road repairs that allow us to enjoy such a high quality of life.

For the past decade, previous legislatures cut LGA again and again, pushing the burden of paying for our needs onto the backs of low- and middle-income Minnesotans in the form of higher property taxes. With more LGA available to pay for vital services, our city can afford to reduce that property tax burden.

Second, our budget exempts all cities and counties from paying sales taxes. When state lawmakers originally extended the state sales tax to purchases by cities and counties in 1992, local governments passed those additional costs on to residents in the form of higher property taxes.

The new sales tax exemption in our budget creates significant savings for cities like Minneapolis, eliminating the additional costs once responsible for property tax hikes.

On top of these steps, the DFL-led legislature invested in direct property tax relief for homeowners and renters.

In 2014, over 300,000 homeowners will see their Homestead Credit Refund increase by an average of $212, with more than 137,000 additional homeowners qualifying for a refund. In addition, over 65,000 renters will see their Renter’s Credit increase by an average of $179, with more than 10,000 additional renters qualifying for a refund.

While I believe we can and should do more to bring down the property tax burden on low- and middle-income Minnesotans, the legislature made meaningful progress this year to reverse a decade-long trend of property tax hikes and put us on the path towards greater economic security for all Minnesotans.

Raymond Dehn
State Representative, District 59B