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Local property
<br />tax rates Local Property Tax Rates (Tax Effort). In this section, we compare actual use of the
<br /> base, or level of effort made to raise revenue from the local tax base, specifically the
<br /> property tax base, as requested by the mandate.
<br /> Fortunately, tax effort is easily measured by use of the local tax rate.' Two commu-
<br /> nitieswith the same tax base will be able to raise the same revenue with the same
<br /> level of effort (tax rate). If one exerts a greater effort (applies a higher rate), it will
<br /> raise more revenue.
<br /> Table 5, below, compares the city portion of local property tax rates and the total
<br /> property tax rate (all jurisdictions) for cities with sales taxes, and for cities without
<br />Table 5 sale taxes. Generally, cities with local sales taxes, with the exception of St. Paul,
<br /> Duluth and Hermantown, have higher
<br />Local sales taxes and local property tax effort (CY 2003)* property tax rates than non-sales tax cities
<br />(Cities with local sales taxes compared to all cities in the population group) In the Same populatlOri range. Th1S COUld
<br /> mean that sales tax cities have higher
<br />Population Jurisdiction Tax Capacity Tax Capacity
<br />ex enditure needs
<br />reater demand for
<br />I~ g
<br />Range **
<br />,
<br />Population Rate (all juris- Rate (city only)
<br /> dictions) public services, and smaller tax bases; or
<br />0-5,00o that the receive less state aid than non-sales
<br />~'
<br />All cities 109.0 39.6
<br />Two Harbors 3,633 116.5 53.8 tax C1t1eS. The Same 1S true Of COOK COUnty'S
<br />Proctor 2,841 143.7 43.4 tax rate relative t0 thOSe Of Other COUnt1eS.
<br />5,001-10,000
<br />Note that all sales tax cities
<br />with exce
<br />tion
<br />All cities ,
<br />p
<br />104.8 33.8
<br />Hermantown 8,178 116.7 22.6 of St. Paul, have property tax rates greater
<br />10,001-15,000 than the statewide average for all non-sales
<br />All cities 99.6 30.1 tax cities. Cook county also has a tax rate
<br />New ulm 13,543 125.5 55.3 that is lower than that of other counties.
<br />15,001-40,000
<br />All cities 99.6 30.1 How Communities without Local Sales
<br />Mankato 33,362 100.8 32.1
<br /> Taxes Fund Similar Expenditures
<br />40,001-100,000
<br />All cities 102.5 27.7 The department was asked to determine
<br />st. cloud area 86,281 106.7 31.6 how jurisdictions that do not have a local
<br />Duluth 86,044 105.4 23.0 sales tax raise revenue to fund ro ects
<br />h
<br />Rochester 91,264 104.4 33.0
<br /> similar to those currently funded by local
<br />over 100,000
<br />All cities 99.4 35.4 sales taxes. Our review covered projects
<br />Minneapolis 382,700 110.7 44.3 authorized but not implemented, current
<br />st. Paul 288,000 83.3 23.0 library projects, and convention center
<br />County comparison COriStrUCtlOn.
<br />7-county metro
<br />average 2,484,107 98.6 29.1
<br />Greater MN county Projects authorized but not implemented
<br />average 1,361,870 112.5 39.5 Of the 231oca1 general sales taxes that have
<br />Cook County 3, 024 64.9 45.9
<br />been authorized, 10 have not been imposed.
<br />* Iri mOSt CaS2S, the pr0J2CtS were Carried OUt,
<br />Local property tax is measured by the local property tax rate (tax capacity rate)
<br />* * Tax capacity rate is th e total property tax revenue divided by the net tax capacity thOUgh SOmetlmeS t0 a leSS2r extent than
<br />(market value times class rate), adjusted for current market conditions. originally planned, and frequently with the
<br /> aid of state grants. See Appendix G for a
<br /> summary of the projects where the tax was not imposed.
<br />Public Libraries
<br />There are approximately 380 public libraries in cities in Minnesota (853 cities).
<br />From 1991-2000, approximately 60 Minnesota cities built public libraries. The
<br />7. Local property tax effort is measured by the local property tax capacity rate defined as local levy
<br />divided by local tax capacity (estimated market values multiplied by statutory class rates).
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