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. GLOSSARY OF TERMS CIRCUIT BREAKER - A state.paid property tax refund program for homeowners who have property taxes out of proportion with their income. A similar program is also available to renters. CLASS RATES - The percent of market value set by state law that establishes the property's tax capacity subject to the property tax. (See Table A for a sample list of class rates) FISCAL OIS~ARITIES ~ROGRAMS - Local units of govern- ment in the Twin Cities metropolitan area and on the Iron Range participate in property tax base sharing programs. Under these two programs, a portion of the growth in commercial and industrial property value of each city and township is contrib- uted to a tax base sharing pool. Each city and township then receives a distribution of property value from the pool based on market value and population in each city. . HOMESTEAD AND AGRICULTURAL CREDIT AID (HAC A) - A property tax relief program that replaced the former homestead credit program and the agricultural credit program. HACA is tied to class rate reduc- tions for certain classes of property. LOCAL GOVERNMENT AID (LGA) - A state government revenue sharing program for cities and townships that is intended to provide an alternative to the property tax. LOA is distributed through a fonnula based on tax base, population, population decline, age of housing, and the percent of market value classified as commercial or industrial. No city can receive less LOA than it did in 1993. LOCAL PERFORMANCE AID (LPA) - A state program for cities and counties that is intended to provide an incentive for local governments to develop perfor- mance measurement systems. . LOCAL TAX RATE - The rate used to compute most taxes for each parcel of property. Local tax rate is computed by dividing the certified levy (after reduction for fiscal disparities distribution levy, if applicable, and county disparity reduction aid) by the taxable tax capacity. MARKET VALUE - An assessor's estimate of what prop- erty would be worth if sold on the open market. The market value is set on January 2 of the year before taxes are payable. MARKET VALliE LEVIES - Voter approved levies applied. to a parcel's market value rather than tax capacity. PROPERTY CLASS - The classification assigned to each parcel of property based on the use of the property. For example, owner-occupied residential property is classified as homeotead. . PROPERTY TAX LEVY - The ta.~ imposed by a local unit of government. The tax is established on or around December 28 of the year preceding the year that the levy will be paid by taxpayers. TARGETING REFUND - A state paid property tax refund for homeowners whose property taxes have in- creased by more than t2 percent. A similar pro- gram is available to cabin owners. T AX CAPACITY - The valuation of property based on market value and statutory class rates. The prop- erty tax for each parcel is based on its tax capacity. TAXABLE TAX CAPACITY - The sum of the tax capacities of all parcels in the taxing jurisdiction after adjust- ments for fiscal disparities, tax increment and other property not available for general tax purposes, TOTAL TA.'C CAPACITY - The amountcomputed by first. totaling the tax capacities'of all parcels of property within a city. TOTAL TA.'C RATE - the sum of the local tax rates for all taxing authorities that levy against a parcel of property (county, school, city or town, and special taxing districts). The total tax rate times the parcel's tax capacity equals the amount of taxes the property pays (not counting any voter-approved market value levies). TRUTH IN TAXATION - .The taxation and notification law, which requires local governments to set estimated levies, inform taxpayers about the impacts, and hold a separate hearing to take taxpayer input Slide No.' 14