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<br />Glossary of Terms <br />Circuit breaker - A state-paid property tax <br />refund program for homeowners who have <br />property taxes out of proportion with their <br />income. A similar program is also available <br />to renters. <br /> <br />Class rates -The percent Qf market value set <br />by state law that establishes the property's <br />tax capacity subject to the property tax. See <br />Table A for a sample list of class rates. <br /> <br />Fiscal disparities programs - Local units of <br />government in the Twin Cities metropolitan <br />area and on the iron range participate in <br />property tax base sharing programs. Under <br />these two programs, a portion of the growth <br />in commercial and industrial property value <br />of each city and township is contributed to a <br />tax base sharing pool. Each city and <br />townsl1ip thert receives a distribution of <br />property value from the pool based on market <br />value and population in each city. <br /> <br />Homestead and agricultural credit aid <br />(HACA) - A $200 million property tax relief <br />prograln that was eliminated in 2001. <br /> <br />Local government aid (LGA) - A state <br />government tevenue sharing program for <br />cities and townships that is intend€d to <br />provide an alternative to the property tax. <br />The formulae for distributing the aid <br />payments were changed for 2004 and <br />beyond. Transition mechanisms built into <br />the new LGA law mean that it will be several <br />years before all cities are fully "on" the new <br />formula. LGA is distributed using different <br />formulae for cities over 2,500 and cities <br />under 2,500. Large city formula factors are: <br />pre-1940 housing percentage, population <br />decline over last decade, accidents per capita, <br />average household size, metro or non-metro, <br />and adjusted net tax capacity per capita. <br />Small city formula factors are: pre-1940 <br />housing percentage, population decline over <br /> <br />last decade, commercial/industrial property <br />percentage, and population. The 2006 <br />Legislature implemented a new $6 per capita <br />aid base for cities under 5000. <br /> <br />Local tax rate - The rate used to compute <br />taxes for each parcel of property. Local tax <br />rate is computed by dividing the certified <br />levy (after reduction for fiscal disparities <br />distribution levy and disparity reduction) by <br />the taxable tax capacity. <br /> <br />Market value - An assessor's estimate of <br />what property would be wol1:h on the open <br />market if sold. The market value is set on <br />January 2 of the year before taxes are <br />payable. <br /> <br />Market value homestead credit - This <br />credit offsets a portion of each homestead's <br />property tax burden equal to .4 percent of the <br />homestead's market value up to a maximum <br />credit of $304. <br /> <br />Property class - The classification assigned <br />to each parcel of property based on the use of <br />the property. For example, owner-occupied <br />residential property is classified as <br />homestead. <br /> <br />Property tax levy - The tax imposed by a <br />local unit of government. The tax is <br />established on or around December 28 of the <br />year preceding the year the levy will be paid <br />by taxpayers. <br /> <br />Targeting refund - a state paid property tax <br />refund for homeowners whQse property taxes <br />have increased by more than 12 percent. A <br />similar program is available to cabin owners. <br /> <br />Tax capacity - The valuation of property <br />based on market value and statutory class <br />rates. The property tax for each parcel is <br />based on its tax capacity. <br /> <br />4 <br />