Dakota County likely won?t raise its taxes next year, but property owners could see their tax bills go up because of an eliminated state-paid tax credit, officials said.
As part of the Legislature?s special session, lawmakers scrapped the Market Value Homestead Credit ? a $261 million state-paid tax-relief program for property owners.
The change will affect each county differently, said Jeff Spartz, executive director of the Association of Minnesota Counties. some counties have plans to reduce their taxes and budgets to help taxpayers take the hit, while others are increasing their levies.
?Most counties will have to do a little bit of both,? Spartz said.
In Dakota County, leaders hope to ease the blow by keeping the county?s levy flat. Without the credit, property owners with a $200,800 median-value home will see a $20 increase on their taxes payable next year, said Matt Smith, the county?s financial-services director.
That would bring the tax bill to $589 for those homeowners.
The county board is expected to adopt its maximum proposed levy Tuesday.
Metrowide, talks are in the works to decrease county levies in Anoka, Carver and Washington, officials say. Hennepin County is proposing a flat levy, while Ramsey and Scott counties are suggesting levy increases.
This year, Dakota County?s levy generated $129.4 million in revenue, Smith said. County staff is planning a budget that would not increase taxes next year.
Taxpayers will pay more without the tax credit, but the money will help the state?s ? not the county?s ? budget, said Dakota County Commissioner Nancy Schouweiler.
?A great deal of burden has been put on local government to solve the state?s financial budgets,? Schouweiler said. ?It?s unfortunate the Legislature chose to increase property taxes (for people)?whether or not they can afford to pay the increase.?
The extra cost may be too much for some homeowners, she added.
?They might be able to make their mortgage payments,? Schouweiler said. ?But this added burden on property taxes just might be the last straw for them.?
Under the new changes, the state will continue to pay a share of taxes for some lower-valued properties ? even without the homestead credit in place, Smith said.
Dakota County has been preparing for state budget woes for years.
Since 2010, the county has cut its spending by 10 percent, Smith said. a voluntary retirement incentive program, a cheaper health insurance plan and 60 layoffs helped reduce the budget and avoid a need for big cuts next year.
?We were able to get out in front of the state?s changes,? he said.
The county planned for $8 million in state funding reductions going into 2012, which will enable this year?s $307 million operating and capital budget to remain flat, Smith said.
However, property values in the county continue to drop.
The county?s $441 million tax base this year is estimated to decrease by nearly 7 percent for taxes payable in 2012, Smith said. to generate the same revenue as last year from the county levy, the tax rate will have to increase by nearly 7 percent.
Up until now, the county has made budget reductions by eliminating expenses in areas that weren?t necessarily evident to residents, Schouweiler said. but making future cuts could mean changes at libraries, parks and other nonmandated county programs.
?In the past, we?ve tried to stay away from that,? she said. ?We really take a lot of pride in those areas. we would hate to start cutting away in those areas.?
A proposed county budget is expected to be introduced in early November.
Maricella Miranda can be reached at 651-228-5421.
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