Tax burden continues shift

Many homeowners to see lower tax bill; commercial property, apartments get higher bills

The nearly 96,000 “Truth in Taxation” notices mailed out Nov. 13 by Washington County contained a hard truth for owners of commercial property and apartments.

Despite no increase in the median value of those properties, their owners will see high 2013 tax bills, the Board of Commissioners was told at a workshop Tuesday.

Many residential property owners saw reductions in their 2013 property taxes due mainly to an average 7.4 percent reduction in median value of residential property in the county.

The total 2013 property tax amount billed was $375.4 million, a 1.7 percent increase over the 2012 figure of $369.3 million. That 2012 bill was a 3.7 percent increase over the 2011 amount of $356.1 million.

“The county levy was flat. There was no increase,” said Jennifer Wagenius, director of the Property Records and Taxpayer Services department.

PRTS Budget Analyst Joanne Helm said that although there was no change in the median values of commercial, industrial and utility property and apartments, owners of those properties saw tax increases. Commercial property saw a 6.5 percent median total tax change and apartment parcels saw a 9.1 percent median total tax change, according to Helm.

Helm cited three reasons contributing to the increase in commercial-industrial and apartment taxes: a shifting of the tax burden from residential to commercial property; a 3.7 percent increase in the state tax rate, and an 8.1 percent increase in the fiscal disparity tax rate.

“Since the majority of property in the county is residential, and the median value change on residential property was an 8 percent reduction before reduction for the homestead exclusion and a 9.8 percent reduction after homestead exclusion, the fact that most C/I values stayed the same shifts more of the local tax burden to C/I property,” said Helm in a memo to the board.

Regarding the increased state tax rate, Helm writes, “When that is applied to a value that remained the same, the result is an increase in the state tax.”

The same reasoning applies to the fiscal disparity tax, Helm writes. “When that is applied to a value that remained the same, the result is an increase in the fiscal disparity tax.”

The increased fiscal disparity tax rate also means Washington County will be a net contributor to the fiscal disparity pool for the first time next year, according to Helm.

“That means county taxpayers will pay more tax dollars into the fiscal disparity pool than they receive,” Helm writes. “In 2013, Washington County will send $3.3 million to the fiscal disparity pool. In the past, Washington County has always been a net recipient and has received additional dollars from the pool.”

Helm also told commissioners that not all residential homeowners would see lower taxes in their 2013 Truth in Taxation notices. About two-thirds of the county’s homeowners would see a tax reduction and one-third would see a tax increase, according to Helm.

“Even though median values went down, taxes on some parcels go up,” she said.

County Administrator Molly O’Rourke said more commercial and industrial property owners that face higher taxes are challenging the county’s tax figures.

“We’re seeing more filings of petitions in tax court by commercial owners,” she said.

Commissioner Gary Kriesel said several years of commercial property tax increases have hit Valley businesses hard.

“I would have to think that commercial properties are feeling some pain,” he said. “You keep pushing those businesses, they’ve got all they can do to keep the doors open on Main Street.”

County property owners get the chance to discuss their 2013 tax notices at the board’s annual Truth in Taxation public hearing set for 6 p.m. Dec. 6. Wagenius said her department would also hold an information meeting for local government officials at 6 p.m. Dec. 13 in a lower level room at the Government Center in Stillwater.

Commissioners are expected to set the county’s proposed 2013 budget and taxes at their Dec. 18 meeting.