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Minnesota Senate

Minnesota House ofRepresentatives

State Capitol100 Rev. Dr. Martin Luther King Jr. Blvd.St. Paul, Minnesota 55155

Sen. D. Scott Dibble651-296-4191sen.scott.dibble@senate.mn

Rep. Frank Hornstein651-296-9281rep.frank.hornstein@house.mn

Rep. Marion Greene651-296-0171rep.marion.greene@house.mn

November 8, 2011

Dear neighbor,

If youre a homeowner paying the second half of your property tax bill this month, pay special

attention to your statement. Many of you should notice a line called the Homestead Credit, a

direct property tax relief program that lowers homeowner property taxes. Any home valued

under about $414,000 automatically receives the credit. The maximum credit is $304 and the

average credit is $202. Ninety-five percent of all homeowners receive this benefit.

Wed like all residents to take notice of this special property tax relief now because next year, the

Homestead Credit no longer will exist. The state budget fix that Republicans insisted on and

voted for during the July special sessionand which the three of us voted againstincluded an

irresponsible decision to eliminate the Homestead Credit, meaning the property tax reduction

you see on this years statements disappear next year.

The Republicans replaced the Homestead Credit with a new scheme that will require cities andcounties to factor a lower percentage of homeowners total market value when applying levies.

This new program provides $0 in property tax relief, eliminating a program that provided $538

million in relief; it only shifts which property tax payers bear the burden expected to be homes

that have increased or maintained their values, residential rental properties and commercial

spaces that are increasing in value.

Probably most upsetting is that unlike the old system, there is no guarantee that this new so-

called Homestead Market Value Exclusion will result in lower property taxes for even one

homeowner because the deduction no longer is applied directly to individual tax bills. Instead,

many homeownersand business owners, commercial property owners, renters and owners ofhighly valued homeswill see an increase in their tax bills next year as cities and counties are

forced to spread their levies across more properties to make up for the artificially lowered tax

base.

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This is nothing but a bait and switch by Republicanstrying to appear as though theyre keeping

property taxes flat, but actually forcing them up by their very action. Its a sneaky way to once

again push the states budget troubles onto property taxpayers. Minneapolis is just one of many

cities proposing a zero percent levy increase for 2012, but the citys hard work at maintaining

costs is for naught because of the Republican legislatures changes. Minneapolis is predicting at

least 35 percent of residential homes in the city will see a city property tax increase of up to five

percent in 2012, even though those homes have not changed homestead status, have not had any

improvements, and fall under the citys 0 percent levy increase.

We are especially dismayed that the tremendous property tax relief delivered from the hard won

reforms on the Citys Police and Fire pension obligations, will be eroded by this action.

Property taxes in cities and counties across the state will be increasing in the same manner even

if local governments dont spend one additional dime next year, but simply maintain the current

level of basic services. Its a simple arithmetic fact: raising the exact same amount from anartificially reduced base, absent the offsetting reimbursement from the state, means property

taxes have to increase. And as is always the case when property taxes go up, some properties

have to carry more of the freight if they have maintained their value better than others in the

same jurisdiction. With a cut to the renters property tax credit of 13%, renters are hit twice.

The three of us stood with our DFL colleagues to oppose this change in the first place. We

fought for long-term solutions that wouldnt shove the states problems onto property tax payers

once again, and were prepared to launch a similar fight in 2012. Democrats have proposed

legislation for 2012 that would reverse this years decision and restore the Homestead Credit.

Minnesota property taxpayers already are on the hook for more than $3 billion of GovernorPawlentys budget problems over the past decade. Theres absolutely no excuse for them to pay

even more.

Yours,

D. Scott Dibble

Senator, District 60

Frank Hornstein

State Representative, District 60B

Marion Greene

State Representative, District 60A