Early Indicator: Property Taxes Headed Up

By Don Davis

A preliminary report shows local governments plan to increase property taxes next year.

Tuesday’s Minnesota Revenue Department report indicates cities expect to raise taxes 2.1 percent, counties 1.5 percent, townships 2.1 percent, schools 2.6 percent and other taxing districts 2.3 percent. Within those overall statewide numbers, some governments expect increases, others plan tax cuts.

The numbers are the first indicators of where property taxes may go.

Revenue Commissioner Myron Frans said that preliminary figures like those released Tuesday generally shrink before final property tax levies are approved by year’s end.

“We do know they always come down,” Frans said in an interview about the preliminary and final numbers, adding that there is no way to predict how much.

Tuesday’s report puts into question a prediction Democratic Gov. Mark Dayton and Frans made in July that property taxes would fall 1.5 percent in 2014.

Dayton and Frans credited 2013 Democratic initiatives such as increasing state aid paid to cities, counties and townships. The two predicted in July that after property taxes rose 86 percent since 2002 that next year will be the first time they have decreased in more than 10 years.

“This is reversing a decade-long trend,” Frans proclaimed at the time.

On Tuesday, Frans said that he will continue to work with cities and counties to find ways to reduce preliminary property tax numbers his department had just released.

Frans singled out Minneapolis and Dakota County for lowering taxes for 2014. “We are seeing some really good choices.”

But there was another side: “I am disappointed with some that raised their levies.”

The commissioner said his department will not know the precise property tax picture until February.

In July, Senate Minority Leader David Hann, R-Eden Prairie, said that he doubted the Dayton and Frans predictions of tax cuts. He said local officials make property tax decisions and state officials could not predict what would happen.

Another tax figure released Tuesday showed better news.

Minnesota Management and Budget reported state October revenues were up nearly $56 million from expectations. Half of the jump came in individual income taxes.

“It confirms the trendline of our expanding economy,” Frans said, noting that higher employment reported in recent months resulted in more taxes.