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Q: Won 't cabins andfarmers be exemptfrom payingfor voter approved school levies? A: Yes, fann land and cabin properties have been,exempted from paying for voter approved school operating levies. This will affect existing as well as future voter-approved operating levies for schools as well as voter-approved debt levies for cities and counties. Q: If cabins andfarm land are exemptfrom these voter-approved levies, wan't their share of the taxes be shifted to city taxpayers? A: Taxpayers within cities will largely be protected from shifts in these levies due to the fact that the state will "equalize" the voter-approved operating levies. Equalizing means that the shifts in propeliy taxes that would otherwise occur will be prevented though increased state aid. Q: Will the state levy a property tax? A: Yes, the state will levy a new $592 million property tax that will be applied only to commercial, industrial and seasonal recreational (cabin) properties. TIle state tax will be administered just like any other local government's property tax levy and will be included as a line item on the property tax statement. The state property taxes will initially be deposited in the state's general fund and will therefore be available for general state spending. The state property tax levy will be annually inflated and the increases will be deposited in a new education re~erve account. Q: Will the class rate reductions included in the tax bill reduce our property tax collections? A: With the exception oftax collections in tax increment districts, the state's classification system does not directly affect how much a city will collect in property taxes. TIle classification system simply determines who will pay the property taxes levied by the city, county, school district and any special taxing authorities rather than how much the city will collect, Q: The only class afproperty that was not granted a class rate reduction was low value homesteads. Will their taxes increase? A: The class rate applied to the first $76,000 of homestead value will remain at 1 percent. This is the only major property class that did not receive a class rate reduction. However, at least in the short term, taxes on even these properties will likely be reduced due to two factors. First, lower value homes will receive a new market value homestead credit that effectively translates into the state paying a portion of each qualifying homeowner's tax bill. In addition, all prop'erty owners including Jaw value homes will pay significantly lower taxes to schools due to the state takeover of general education costs. According to legislative estimates, the combined effect of these changes will reduce taxes for most low valued homes. Q: How does the new homestead credit work? A: The credit is equal to 0.4 percent of the market value of the home up to a maximum value of $76,000. For homes valued in excess of$76,000, the credit is gradually reduced by $9 for every $10,000 of the home's market value in excess of$76,000. Therefore, the credit is entirely eliminated for homes valued in excess of$414,000. The homestead credit will not be paid directly to homeowners. Each homeowner will have their property tax bill reduced by the amount of the credit. The city, county, school district and any special taxing authority will receive their total expected tax revenues from a combination of the remaining homeowner taxes and the state paid homestead credit.