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CITY FINANCES 2010 Property Tax Report This year's report shows the continuing toll the weak housing market and economic recession have taken on cities. In addition to declines in residential homestead market value and total city market value, cities again had to deal with state aid and credit reimbursement cuts and levy limits. By Rachel Walker and Lena Gould his,the League of Minnesota ■ Limited market value sunsets.The residential homestead property,non- Cities' 18th consecutive property limited market value (LMV) program, homestead residential property (e.g., tax report,provides an update on which protected homeowners against apartments,student housing),and a few key policy issues related to the property tax system.It also large increases in assessed value,was commercial-industrial property,all allowed to sunset in 2009.Starting decreased in market value over the discusses trends in city property with taxes payable in 2010,there will last year(see Figure 1). tax in terms of both market value no longer be restrictions on assessed Residential homestead property and tax capacity. • value increases. showed a decline in 2009,but this is the first time in the history of this report that Things to note for taxes payable in 2010 Market value trends non-homestead residential and commer- •Aid and credit reimbursement cuts. The slowdown in market value growth cial-industrial values shrank compared to The 2009 legislative session ended described in the last two reports has the prior year.This suggests that assessed 0 without an agreement on how to become much more pronounced.Total values are finally beginning to catch up solve the then$2.7 billion state market value for cities overall decreased to changes in the housing market,a budget deficit.In July 2009,Gov. 3 percent from 2009 to 2010.Looking trend that will likely continue.Assess- Pawlenty used his unallotment power at individual categories of property, ments for taxes payable in 2010 were to reduce appropriations to van- completed by Jan.2,2009.Both agri- ous state programs,including both cultural and other property(e.g.,cab- the 2009 and 2010 payments of local Included with this report: ins,bed and breakfasts,certain marinas) government aid(LGA) and mar- • The 2010 Property Tax Data Table and grew in value compared to 2009.Agri- ket value homestead credit (MVHC) Definitions—see pages 7-27: cultural market value grew at a faster rate reimbursement.For the two-year • Comparative data by economic devel- compared to last year while other kinds period,$192.5 million was cut from opment region and by city population of property market value grew slower LGA and MVHC reimbursement category—see the Special Supplement than from 2008 to 2009. A lawsuit was filed chat- insert. payments. • Are ort on the decline of cityA closer look at the change in home- lenging the governor's use of unal- pstead residential market value reveals lotment authorityThe Minnesota revenues--see the Special Supplement insert(back page). differences based on city size and loca- Supreme Court ultimately ruled in tion.When looking at the changes by early May 2010 that Gov.Pawlenty Additional resources available on the population size,the share of cities that did exceed his budget unallotment League website: lost value from 2009 to 2010 increases authority.The Legislature convened a • A city-by-city breakdown of total tax as population does.Almost nine in 10 special session and ratified the bulk of capacity and total market value by cities with populations over 10,000 lost the unallotments,including those to property type. homestead value while just 46 percent • The Property Tax Calculator,an LGA and MVHC reimbursement. interactive web tool allows users of cities with populations under 300 saw • Levy limits. Despite strong legislative to compare estimated city and total a decline.Metro cities were more likely support to repeal levy limits,cities to see a decrease in value than Greater taxes owed on homestead and business with populations over 2,500 are sub- properties in different cities. Minnesota cities (94 percent vs.53 per- 1 jest to levy limits through 2011.The • Several background documents on vari- cent,respectively).The economic devel- levy limit inflation factor for pay- ous aspects of the 0property tax system. opment regions along the western edge able 2010 was just 0.83 percent.Cit- To access all this information,visit of the state had the largest shares of cit- ies could use special levies in 2010 to www.lmc.org/page/1/property-tax- ies experiencing growth in residential recoup lost 2008 and 2009 LGA and state funding-fiscal-issues jsp. homestead market value. MVHC reimbursements. 1 4 M I N N E S O T A CITIES S E P T E M B E R-O C T O B E R 2010