Double-digit property tax increases ahead in St. Paul, Minneapolis

For the second time in the past decade, a majority of Minneapolis and St. Paul homeowners will see property tax increases of about 10% or more next year.

The boost comes a year after local officials held back on significant tax hikes, citing the pandemic and other factors, and will strike hardest in low-income neighborhoods where housing values continue to rise.

Officials now are intensifying efforts to steer homeowners toward the state's property tax refund programs. In Ramsey County, for example, about $25 million in potential refunds are going unclaimed, Auditor/Treasurer Heather Bestler said.

Truth in Taxation notices sent to property owners in November revealed a smattering of double-digit percentage hikes across the metro — from Oak Grove to Mounds View and Belle Plaine to Lake Elmo. The notices act as a set-up for tax hearings before local elected officials, but for the most part, opportunities for citizens to vent or urge restraint have passed.

There was no reprieve for Minneapolis homeowners like Karina Secord, who in an e-mail to City Council members complained of trash being strewn across her alley and a failure by police to address crime on her street — all while her tax bill was projected to double.

"Outrageous," she wrote. "Have any council members considered a tax increase limit?"

In the Near North neighborhood of Minneapolis where Secord lives, the median-valued home rose in value by 12.6%, according to a Hennepin County assessor's report. The median-valued home in the nearby Camden neighborhood increased by 8%. Similarly high increases were reported in St. Paul's North End and East Side neighborhoods, leaving homeowners there vulnerable to larger tax hikes.

Eric Charles, who moved to the East Side in 2019, said in a recent voice mail to St. Paul City Council members: "You guys got to figure how to pay [for] stuff without relying on property taxes and raising it astronomically."

His home increased in value by 12.5% in 2021, county records show.

Last month's tax notices do not take into account school district funding proposals voters approved in November. That means taxpayers in communities like Stillwater and Shakopee will see considerably bigger bills in the spring. Stillwater's school levy jumped by 19.9% and Shakopee's by 26.5%, according to the state Department of Revenue.

The St. Paul and Minneapolis school boards approved their district levies last week. Minneapolis, which had been slow to specify the size of its potential increase, told the Star Tribune on Dec. 9 that it was 7.4%, which subsequently passed. The district also took the opportunity to tout the state's property tax refund and deferral programs.

City, county and school officials in St. Paul were briefed in September about the combined impacts of their levy proposals. Then, the property tax system was described as unfair to low-income homeowners because it is not based on income yet the payments consume a larger share of a low-income family's budget.

Mayor Melvin Carter also said low-income families are hardest hit when cuts are made to avoid tax increases.

Refunds, in turn, have taken on added importance. But getting more people to apply — even after e-mail blasts, tax hearing handouts and mail inserts — has been a challenge. That has led some officials to ask: Couldn't they be automatic?

The state now offers two types of homestead credit refunds: The regular credit, which is available to those with a household income of less than $116,180, and a special credit, which applies when one's taxes increase by more than 12% and at least $100.

On Tuesday, the Ramsey County Board will take up its 2022 legislative platform, and among the goals is a push to transition the special credit from one that a homeowner applies for to one that is automatically calculated and applied to property tax statements.

Ryan Brown, a spokesman for the Department of Revenue, said the office has spoken with Ramsey County officials about the refund programs. Any changes would require legislative action, he said, and the department would need to review any bill that is introduced.

He added the Revenue Department is unable to track the actual amount of unclaimed property tax refunds in a given year. But he said its general estimate is that one-third of homeowners who may be eligible are not participating in the program.