When Senator Al DeKruif voted this year to eliminate your homestead credit, he sided with Republicans representing wealthy suburban districts over our rural communities. Wealthy suburbs have never benefited much from homestead credit aid, and citizens in those communities can afford to pay higher property tax bills.
Under the law changes backed by Sen. DeKruif this year, the homestead credit is replaced with something called the Market Value Homestead Exclusion. There are various explanations about how this new system will work, but the bottom line is that cities and counties will lose state aid and local taxpayers will pay more.
When discussing these changes, Sen. DeKruif has said such things as the Homestead Credit was “unreliable” and its demise has been “a long time coming.” The truth is that the legislature needed to fix a big budget deficit, and the new system saves the state money by shifting more of the state’s tax burden onto local taxpayers. For instance, Northfield loses $701,000 in direct dollar-for-dollar property tax relief from the state. This means higher local tax levies that will have to be paid for by Northfield property owners, including businesses.
Recently, the GOP has been more vocal about defending the elimination of the Homestead Market Value Credit and the creation of the new Market Value Exclusion. Most opinion articles and fliers they’ve sent out would lead the reader to believe it was nothing more than a name change. They also falsely claim that they were just doing what local officials wanted. Both are incorrect and misleading.
The GOP claim that by boosting the Property Tax Refund program (PTR) last session they negated any bad effects associated with the Homestead Credit cut. However, the PTR only received $29 million in additional funds while the Homestead Credit elimination will result in a nearly $1 billion property tax increase over the next three years.
The Republican majorities had a clear choice this past session. They could have asked the very richest Minnesotans – those making more than one million dollars a year – to pay their fair share of taxes. Instead, they chose to saddle middle-class families and seniors with a nearly $1 billion property tax increase. Republicans got exactly what they asked for this session: the very richest Minnesotans continue to pay less, and middle-class families will pay even more.
There will be an effort at the legislature next year to reinstate the Homestead Credit. It will be interesting to see if Sen. DeKruif will decide to stand with his party’s leadership on maintaining the new tax system, or if instead he will work to restore the Homestead Credit on behalf of the people who elected him.