Homeowners in the NRHEG School District should find a pleasant surprise when they open their 2014 Property Tax Statements. They will see a reduction in school taxes due to equalization enacted by the Legislature last year. A homeowner with a property valued at $150,000 is expected to see taxes go down by about $37.
Minnesota has a 40-year history of equalizing property taxes for educating children. Equalization means that for a certain level of dollars per child to educate a child, taxpayers pay the same percentage of home value statewide up to a certain home value — the equalization factor. In other words, regardless of zip code, children get the same opportunity to learn, and taxpayers pay the same percentage of home value in property taxes.
The equalization factor had not changed in the state in over a decade, while voter approved operating referendums dollar amounts had more than doubled. The result was increasing taxpayer inequity.
"Poorer valued communities were paying a higher percentage of home value to provide the same dollars per child to educate the children of the community, than wealthier communities," said Fred Nolan, executive director of MREA, a statewide educational association representing nearly 180 Greater Minnesota school districts.
The 2013 legislature addressed this by equalizing the first $300 of operating referendum revenue per child at $880,000 of Referendum Market Value (RMV) per pupil. That is a 72 percent increase over the previous highest level of equalization factor.
Senator Rod Skoe led the Senate Tax Committee to devote $60 million of state revenue to this effort to equalize the tax effort of homeowners across Minnesota. Much of that tax equalization was spread across rural Minnesota as can be seen in this map of changes to school taxes created by MREA to show the impact of the 2013 tax bill.
"This marked the single largest advance in education funding equity in Minnesota in a decade," Nolan said. "This will narrow the 5th to 95th gap to its smallest since 2003."
While most of the funding for educating children comes right from state income and sales taxes, The NRHEG School Board is most appreciative of our voter support for voter approved referendums that are critical to providing our quality education. As a result of the actions of the 2013 legislature, our total district property taxes dropped $73,484 and was replaced with state aid. That is a reason you should see a reduction in your school property taxes.
The system is not perfect. If you had an increase in home or land value, you will probably see a tax increase. Property taxes are a percent of the value of property, not a percentage of income.
