Where’s the relief?

Property tax reforms adopted by legislators during the 2013 and 2014 sessions were supposed to result in the largest property tax reduction in 12 years for Minnesotans. But that hasn’t been the case locally, where proposed tax statements for a number of homeowners show increases, instead, largely due to the actions of the Legislature.

Most of the increases are coming as a result of the St. Louis County School District, which added $300 per pupil through an operating levy last year and an additional $424 per student this year through the new Local Optional Revenue program.

The latest levy will raise $863,264 for the district, and most of that will be paid by owners of residential property. For 2015, the share of the district’s levy paid by local homeowners will jump to $1.59 million, an increase of $934,323 over the previous year.

Although lawmakers absolve themselves of responsibility, noting that districts have the discretion not to seek the additional tax dollars, it was legislators that gave them the authority. Prior to 2013, districts were required to seek voters’ approval for any excess operating levy. But the state gave the districts the go-ahead to levy up to $300 per pupil without voter approval.

The newest addition to school funding, known as the Local Optional Levy, ups school boards’ levy authority by another $424 per pupil. And unlike the initial $300 levy increase, this one comes with no state equalization for residents of the St. Louis County School District. What’s more, both new operating levies exempt seasonal/recreational properties, which means local homeowners are paying the lion’s share of this additional tax burden— and with less say over the process than ever. Legislators, by their actions, have taken a big step backwards in terms of accountability for school districts, by eliminating the role for voters in the process.

While the school district’s additional revenue accounts for most of the increase in local property taxes, the Cook-Orr Area Healthcare District has also contributed to the increase for many property owners in northwestern St. Louis County.

In the past, the district’s levy had been restricted to capital improvements and was capped at a set amount. But special state legislation lifted that restriction and the cap in 2008. Since then, the levy has been increased several times, most notably by 55 percent in 2009. The district has proposed a $100,000 increase in the levy this year, bringing the total levy in 2015 to $1.39 million. In 2008, by contrast, the levy was just $600,000.

Again, lawmakers created the situation by changing the levy’s language. It’s up to the healthcare board to determine whether to approve an increase, but legislators gave them the tool they needed to make it happen and legislators can’t brush their responsibility.

We’re not suggesting that tax increases are never necessary, but they need to be considered carefully. Consider the example of local cities, many of which are calling for small or zero increases in their levies for 2015.

Providing new funding streams for schools and the hospital district isn’t providing free money. Someone ends up paying the bill and, in this case, it’s the local homeowners. They’re already making a major contribution to the district through a $78.8 million bond issue. That bond measure, and the capital investment it funded, was supposed to pay dividends through reduced operating costs and greater financial stability for the district. It was supposed to eliminate the need for new excess operating levies. Instead, the school board piles on one tax increase after another. And homeowners, especially, are feeling the effects.