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------ . .-. GLOSSARY OF TERMS . -. CIRCUIT BREAKER - A state-paid property tax refund MARKET VALUE - An assessor's estimate of what prop- program for homeowners who have property taxes erty would be worth if sold on the open market, out of proportion with their income, A similar The market value is set on January 2 of the year . program is also available to renters, before taxes are payable. CLASS RATES - The percent of market value set by state MARKET VALUE LEVIES - Voter approved levies applied . law that establishes the property's tax capacity to a parcel's market value rather than tax capacity, subject to the property tax, (See Table A for a sample list of class rates) PROPERTY CLASS - The classification assigned to each . parcel of property based on the use of the property, FtSCAL DISPARITIES PROGRAMS - Local units of govern- For example, owner-occupied residential property ment in the Twin Cities metropolitan area and on is classified as homestead, . the Iron Range participate in property tax base sharing programs, Under these two programs, a PROPERTY TAX LEVY - The tax imposed by a local unit of portion of the growth in commercial and industrial government. The tax is established on or around . property value of each city and township is contrib- December 28 of the year preceding the year that the uted to a tax base sharing pool. Each city and levy will be paid by taxpayers, township then receives a distribution of property . value from the pool based on market value and TARGETING REFUND - A state paid property tax refund population in each city, for homeowners whose property taxes have in- creased by more than 12 percent, A similar pro- HOMESTEAD AND AGRICULTURAL CREDtT AID (HACA) - A gram is available to cabin owners, -- property tax relief program that replaced the former homestead credit program and the agricultural TAX CAPACtTY - The valuation of property based on credit program, HACA is tied to class rate reduc- market value and statutory class rates. The prop- . tions for certain classes of property, erty tax for each parcel is based on its tax capacity, LOCAL GOVERNMENT AID (LGA) - A state government TAXABLE TAX CAPACITY - The sum of the tax capacities . revenue sharing program for cities and townships of all parcels in the taxing jurisdiction after adjust- that is intended to provide an alternative to the ments for fiscal disparities, tax increment and other property tax, LOA is distributed through a formula property not available for general tax purposes. . based on tax base, population, population decline, age of housing, and the percent of market value TOTAL TAX CAPACITY - The amountcomputed by fIrSt classified as commercial or industrial. No city can totaling the tax capacities 'of all parcels of property . receive less LOA than it did in 1993, within a city, LOCAL PERFORMANCE AID (LPA) - A state program for TOTAL TAX RATE - the sum of the local tax rates for all cities and counties that is intended to provide an taxing authorities that levy against a parcel of . incentive for local governments to develop perfor- property (county, school, city or town, and special mance measurement systems, taxing districts), The total tax rate times the parcel's tax capacity equals the amount of taxes the . LOCAL TAX RATE - The rate used to compute most taxes property pays (not counting any voter-approved for each parcel of property, Local tax rate is market value levies), computed by dividing the certified levy (after . reduction for fiscal disparities distribution levy, if TRUTH IN TAXATION - The taxation and notification law, applicable, and county disparity reduction aid) by which requires local governments to set estimated -. the taxable tax capacity, levies, inform taxpayers about the impacts, and hold a separate hearing to take taxpayer input. Slide No. 14 \ .