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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 VALVE LEnES - '-oter 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. FISCAL 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 CREDIT AID (HACA) - A gram is available to cabin owners. e property tax relief program that replaced the fonner homestead credit program and the agricultural TAX CAPACITY - 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 TAlC 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 ta.~. LOA is distributed through a fonnula property not available for general tax purposes. based on tax base, population, population decline, age of housing. and the percent of market value TOTAL TAlI: CAPACITY' The amount computed 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 TA.'( 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 govemments 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 e the taxable tax capacity. levies, infonn taxpayers about the impacts, and hold a separate hearing to take taxpayer input. Slide No. 14 \