State Cuts Force Property Taxes to Rise

By KBJR News 1

August 31, 2010 Updated Aug 31, 2010 at 1:05 PM CDT

DULUTH, MINN. --- Minnesota Governor Tim Pawlenty has taken away just shy of $16 million in state aid from the city of Duluth since 2008, forcing the city to find at least some of that money elsewhere.

"The unfortunate thing," St. Louis County Commissioner Steve O'Neil said, "is the governor has really put this burden in some ways, disproportionately on local governments, cutting cities and counties."

Because of that, many local governments have turned to increasing property taxes.

Minnesota 2020, a political think tank, says here in Duluth the average homeowner's property taxes have risen an inflation-adjusted 29 percent.

Duluth city assessor John Gellatly says an increase is normal when other sources of income are cut.

"Whatever portion of the city budget that isn't covered by property tax must be covered by some other source," Gellatly said. "If that source is reduced and we keep our levy the same or increase it, obviously we have to cover more with property tax."

Even so, Gellatly pointed out that most homeowners in Duluth have actually seen a recent decrease in their property taxes.

"For example, if you look at taxes payable in 2010," Gellatly said, "most people's taxes are down about 2 percent this year."

St. Louis County collected more than $41 million in homestead property taxes in 2010, so where does that money go?

In the 2010 fiscal year, the property tax on a $145,000 house in Duluth was $1,465.13.

Of that, $802.56 went to St. Louis County, $381.80 went to the city, and $303.88 went to the school district.

While that seems disproportionate, the county relies solely on property tax for generating revenue while the city has other sources of income, such as taxes on goods and services.

Gellatly said it's also important to note that property taxes may not follow the rise and fall of a property's value, depending on how much has been levied for that year.

"There is no one to one connection between the value of your home and your taxes," Gellatly said. "Your taxes go up and down with the budgets for the city, school district, and county."

Minnesota 2020 will have representatives in Duluth on Tuesday to discuss their concerns about rising property taxes.

They have scheduled a briefing for 2:00 Tuesday afternoon in front of the St. Louis County Courthouse.

Posted by Zach Schneider