Living here in Hennepin County has many
benefits… We have beautiful parks, thriving cities,
successful businesses, farmland, good schools …but supporting all those
resources comes with a price, and that’s the property tax. They’re our oldest form
of taxes going back to the formation of the Minnesota Territory.
I’m guessing we’ve all asked ourselves, Why are my property taxes going up when
the value of my property is going down? The answer is that unlike nearly all
other taxes, the property tax is a tax on the community as a whole, and the value
of your property—your piece of that community—is used to determine your
share of that tax. It is your share of the total cost of local government.
Here’s how property taxes are formed: the people we elect tax a specific dollar
amount on the entire community of taxpayers. This is called a property tax
levy. Police and firefighters, road repair, care for the elderly, schools, libraries,
sewers— all are supported by that levy. This tax is then divided among all the
tax payers based on their individual property value, in proportion to
everyone’s property value. This means that your property tax depends on how
much others in your community are paying, so if all property values are dropping
but your property value does not drop as much as the others, your tax will go up
because your share of the tax levy increased. In other words, property value
alone does not determine your tax, it just determines your share of the total
tax on the community. Okay, now that you know you’re paying your
share of the community’s tax, why does the amount change from year to year?
There are three main factors: first your tax statement is actually 8 to 10 tax
bills rolled into one. Each county, city, school and special
taxing district has its own budget and determines its own part of your tax—your
total tax is the sum of your share of all those separate tax levies.
In Hennepin County, seven commissioners represent the entire population of 1.1
million people. Those seven have to weigh the needs of all residents and make the
difficult choices about what services to fund and needs are always changing. The
county may have had to plow less snow this winter, so that cost less, but at the
same time your school district had to add teachers, because more kids have enrolled, so that cost offset the savings. The second factor is that your taxes depend on changes in the market value of your property, and the market values of
all properties in those districts. At least every five years, an assessor looks
at your property and tries to determine its value by comparing it to sales of
similar properties that value may go up or down or stay the same.
However it’s not enough to know that your property value rose or fell to
understand the impact of market value change on your tax. You need to know how
your property value changed compared to all the other properties in your area.
And third, there are a number of exemptions and other programs provided
by state law to make property taxes more fair or equitable. These programs affect
everyone because even if your property doesn’t get a benefit, if some properties
are taxed less, the rest of the community pays more to make up for it. That
includes you. So you can see there are many factors that are constantly
changing and interacting to affect your property tax. Increases in some parts of
your bill offset decreases in others. The most important thing to remember about
property taxes is that they’re designed to share the cost of government services,