calculated for each owner and mailed out in November as a "truth-in-taxation" notice. This occurs before the local "units" have their final, levy-setting meetings.
A sales or income tax is calculated as a rate applied to sales or income. When sales or income go up or down, revenue automatically tracks these trends. But the property tax is defined by the end product — the amount the people running local government decide it needs to operate.
The fact that market values have declined in many St. Paul neighborhoods does not mean the city will get less revenue. Market value changes affect how the tax burden is distributed throughout the city but do not change the amount that will be collected.
State policy is critical. Historically, owner-occupied, lower-valued homes have been favored in the state's property-tax classification system. That means the owner of a business property will pay more the owner of a home of the same market value.
Confused? Of course!
Oh — one more thing. In the metro area, a percentage of commercial and industrial property tax revenue is pooled and redistributed to communities under the "fiscal disparities" program. This year, the levy increases proposed in St. Paul will be blunted by that pool, which is doing well despite the economy.
According to Chris Samuel of Ramsey County's property records and revenue division, a single-family home in St. Paul with a median taxable value — $168,100, assuming an 8 percent market value decrease — would see an increase of only $3 if all the proposed hikes were enacted. But a commercial property with a median taxable value — $442,600, assuming no market-value change — would see an increase of $884.
"Market values distribute the burden,'' said Mark Haveman, executive director of the Minnesota Taxpayers Association. "They don't set the burden." If all values are falling, those that fall the least are likely to be hit harder. In St. Paul, Samuel's chart shows that Highland Park will hold that dubious honor.
We have long wished for a simpler, easier-to-understand property tax system. That does not seem to be likely any time soon. We have to live with what we've got.
That means that local governments must be as frugal as possible, and must ask their property owners for only that which they absolutely need. And property owners, to the extent that they are able, should try to speak up, write letters and make sure that local officials know the pressure is on.
The Minnesota Taxpayers Association has published an informative (and 44-page) booklet titled "Understanding Your Property Taxes." Its main recommendation for property owners is to keep an eye on local government spending so that the "bottom line" is kept as small as possible. The MTA document is available at: www.mntax.org/cpfr/uypt.php.
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