To the editor:
Over the past couple years, I've had an opportunity to meet with thousands of residents in southern Minnesota and answer questions about issues facing our great state. Two of the more common questions are: "How will loss of Market Value Homestead Credit affect me, and why is my city's LGA being cut?"
Beginning in 2012, there was a change from the Market Value Homestead Credit (MVHC) to a new Market Value Homestead Exclusion (MVHE). What this means for homesteaded property owners is a more stable tax credit. Some in St. Paul have tried to politicize the change, and lay the blame for local tax increase choices on the Legislature. However, the demise of the MVHC has been a long time coming, and was lobbied for by the League of Minnesota Cities and the Association of Minnesota Counties. The MVHC program has been unreliable and local governments have been fully reimbursed only one time.
In addition, the 2011 Tax Bill included a $30 million expansion of the homeowner property tax refund program, which provides direct relief to homeowners whose property taxes are high relative to their incomes. Low- and middle-income taxpayers will now be able to capture more property tax relief through this program directly instead of through local government aid programs.
Like most of the homeowners in our district, I too am concerned about rising property taxes. However, if the nonpartisan estimates are correct, the 2013 statewide homeowner property taxes are projected to decrease by 1.6 percent, the largest decrease in 10 years.
Our cities have been receiving aid from the state in the form of Local Government Aid (LGA). In order to balance a state budget that showed a $5.2 billion deficit, we had to look for ways to economize. One way the legislature did that was to freeze LGA payments to cities. Recognizing the need for LGA, we strove to keep payments the same rather than cutting, even with the budget problems. This same need underscores the urgency of growing our economy, our jobs, and our tax base to create a more stable cash flow for all levels of government.
Some city mayors and administrators called this a cut. There are some involved in politics that call a freeze a cut. Here are the facts about LGA payments to a few cities in southwest Minnesota.
Paid 2010 Paid 2011 Certified 2012
Luverne$1,194,175 $1,194,175 $1,194,175
Pipestone$1,535,857 $1,535,857 $1,535,857
Windom$1,202,917 $1,202,917 $1,202,917
Worthington$2,705,107 $2,705,107 $2,705,107
State Sen. Al DeKruif