Vicki Heller wrote: > Vicky here: It would be nice for Ms. Becker to explain the following page > from the City's financial reports. Market values have more than doubled > over the past ten years, while the City's tax capacity has dropped from $324 > million to $295 million. > > http://www.ci.minneapolis.mn.us/financial-reports/cafr2002/p136TaxCapMrktVal > .pdf
<puts on her geek hat again...> Easy. The State Legislature has reduced the tax capacity rates for 1) businesses 2) owners of rental property 3) the wealthy. (note, if you an average Minnesotan, your name probably didn't show up on that list.) Let me explain. In my last post, I explained that your property taxes are based in part on the value of your property (the assessed market value) times a weighting factor called the class rate. When I started geeking of this sort about 15 years ago, the top rate for commercial/industrial property was about 5%. This meant that they kicked in about 5% of their estimated market value into the pot. Rental property kicked in about 3%. Homesteaded property (i.e. owner occupied homes) kicked in 1% or 2% or 3% depending on how valuable the house was. (the higher value the home, the higher rate. This "pot" was the basis for determining the taxes, not the estimated market value. I haven't checked recently but the last time I checked, the commercial rate was somewhere around 2 1/2%. Rental property was about 1 1/2%. And owner occupied homes are now at 1% and about 1 1/2%, with the top rate having been totally eliminated. If you were a homeowner on the lowest end of the scale, being taxed at 1%, sorry, you are about the only group that hasn't gotten a tax break from the classification changes. This explains (in part) why in 1996, the IDS paid about $10 M in taxes and in 2002 paid less than $4 M. And why the property taxes on your home in North Oaks has had a lower rate of increase than my little starter home in Minneapolis. In fact, you may be paying lower taxes than you had in the past, depending on whether the rate of increase in the valuation of your property was less than the savings you would have realized due to the elimination of the highest tier in the classification system. On a macro level this means that although there has been a huge increase in property values in the city, the tax base as measured by tax capacity has actually decreased due to the changes that the classification system by the Legislature. The City has a booming tax base - just ask anyone about their home values. And there are more housing units being added to the City with the huge growth in housing downtown and the infill development occurring. The best property investment deals in the region have been in the Phillips neighborhood, where five years ago you could have bought rental property for about $5,000 a unit which will now cost you over $40,000 per unit. The City is having amazing property value growth. But this does not directly translate to the property tax base when the Legislature steps in and tinkers with the system. One of the major sources of the funding troubles of the City of Minneapolis is that the Legislature has given these tax breaks to the wealthy and big business at the expense of things like my library being open and my parks being clean and being able to have a police officer come when I need help. I guess in the end, one needs to ask why the Legislature is so intent on killing Minneapolis. Study after study has shown that any region where the heart is allowed to rot, the whole region is hurt. Carol Becker Longfellow Who has many skills beyond geeking.... REMINDERS: 1. Think a member has violated the rules? Email the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
