Don't blame higher property taxes on your school district, your city council or your county board, Jeff Van Wychen says; the real reason your property taxes are going up is the state.
Even though property taxes are indeed rising, they don't make up for the loss in state aid that local governments have suffered since Minnesota began running budget deficits, says Van Wychen, a former fiscal analyst for the League of Minnesota Cities.
"Local government officials should not be held accountable for property tax increases caused by a loss of state revenue," Van Wychen told a forum April 14, arranged by the Minnesota Council of Nonprofits.
"Property tax increases are not going to new revenue; they're going to replace cuts in state aid," he says.
No new taxes? Ri-i-i-ight.
Van Wychen's analysis is another piece of evidence showing the fallacy of Gov. Tim Pawlenty's "no new taxes" claim, says Marcia Avner, public policy director for the Council of Nonprofits. The state's own 2005 "Tax Incidence Study" also shows that the state tax burden is being shifted increasingly onto property taxes.
Even so, county officials say, political realities prevent them from raising local property taxes enough to replace all the state money they lose. In 2003, for instance, Ramsey County had to absorb $20 million in direct cuts in state aid, plus $10 million in additional costs that the state shifted onto the county, said county administrator David Twa.
Dakota County took $20.3 million in cuts in 2003, the equivalent of turning the clock back six years, said Marilynn Loving, deputy director of the county's community services division.
Hennepin County took $100 million in cuts, had to eliminate 750 jobs, and imposed two years of wage freezes on front-line employees, said Richard P. Johnson, deputy county administrator.
Even though budget proposals in the current Legislature don't inflict additional cuts, county officials say they lock in previous service cuts and still force counties to raise property taxes to cover higher costs, especially in health insurance and pension liabilities.
Prevention services ? especially in public health, law enforcement and human services ? have suffered the most, Ramsey's Twa said. The county's Department of Human Services, he said, is seriously considering changing its mission statement from "Helping people survive and thrive" to simply "Helping people survive."
Spending down in real terms.
Van Wychen says the impact of the shifting tax burden can be seen in several ways:
? The price of state and local governments ? which is an official state calculation ? has fallen from 17.5 percent of personal income as recently as 1998 to 16 percent this year. It is projected to keep declining, to 15.3 percent, by 2009.
? In 1992, government revenues in Minnesota, as a percentage of personal income, ranked 9th highest in the nation. By 2002, Minnesota was down to 24th ? essentially right in the middle.
? In 1997, K-12 spending in Minnesota was 6.9 percent above the national average, based on spending per $1,000 of personal income. By 2002, there was almost a complete reversal: 6.7 percent below the national average.
Pawlenty's 2006-'07 budget ? though it looks like it increases school spending marginally ? actually cuts spending to schools by 2.8 percent in real dollars, Van Wychen says. He calculates that by adjusting for inflation using what is known as the implicit price deflator for state and local governments.
Adapted from The Union Advocate, the official newspaper of the St. Paul Trades and Labor Assembly. E-mail The Advocate at: advocate@mtn.org
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Don’t blame higher property taxes on your school district, your city council or your county board, Jeff Van Wychen says; the real reason your property taxes are going up is the state.
Even though property taxes are indeed rising, they don’t make up for the loss in state aid that local governments have suffered since Minnesota began running budget deficits, says Van Wychen, a former fiscal analyst for the League of Minnesota Cities.
“Local government officials should not be held accountable for property tax increases caused by a loss of state revenue,” Van Wychen told a forum April 14, arranged by the Minnesota Council of Nonprofits.
“Property tax increases are not going to new revenue; they’re going to replace cuts in state aid,” he says.
No new taxes? Ri-i-i-ight.
Van Wychen’s analysis is another piece of evidence showing the fallacy of Gov. Tim Pawlenty’s “no new taxes” claim, says Marcia Avner, public policy director for the Council of Nonprofits. The state’s own 2005 “Tax Incidence Study” also shows that the state tax burden is being shifted increasingly onto property taxes.
Even so, county officials say, political realities prevent them from raising local property taxes enough to replace all the state money they lose. In 2003, for instance, Ramsey County had to absorb $20 million in direct cuts in state aid, plus $10 million in additional costs that the state shifted onto the county, said county administrator David Twa.
Dakota County took $20.3 million in cuts in 2003, the equivalent of turning the clock back six years, said Marilynn Loving, deputy director of the county’s community services division.
Hennepin County took $100 million in cuts, had to eliminate 750 jobs, and imposed two years of wage freezes on front-line employees, said Richard P. Johnson, deputy county administrator.
Even though budget proposals in the current Legislature don’t inflict additional cuts, county officials say they lock in previous service cuts and still force counties to raise property taxes to cover higher costs, especially in health insurance and pension liabilities.
Prevention services ? especially in public health, law enforcement and human services ? have suffered the most, Ramsey’s Twa said. The county’s Department of Human Services, he said, is seriously considering changing its mission statement from “Helping people survive and thrive” to simply “Helping people survive.”
Spending down in real terms.
Van Wychen says the impact of the shifting tax burden can be seen in several ways:
? The price of state and local governments ? which is an official state calculation ? has fallen from 17.5 percent of personal income as recently as 1998 to 16 percent this year. It is projected to keep declining, to 15.3 percent, by 2009.
? In 1992, government revenues in Minnesota, as a percentage of personal income, ranked 9th highest in the nation. By 2002, Minnesota was down to 24th ? essentially right in the middle.
? In 1997, K-12 spending in Minnesota was 6.9 percent above the national average, based on spending per $1,000 of personal income. By 2002, there was almost a complete reversal: 6.7 percent below the national average.
Pawlenty’s 2006-’07 budget ? though it looks like it increases school spending marginally ? actually cuts spending to schools by 2.8 percent in real dollars, Van Wychen says. He calculates that by adjusting for inflation using what is known as the implicit price deflator for state and local governments.
Adapted from The Union Advocate, the official newspaper of the St. Paul Trades and Labor Assembly. E-mail The Advocate at: advocate@mtn.org