When it comes to the assessment of property values, conservative activist and Taxpayer League of Minnesota president Phil Krinkie has all the answers. Unfortunately, none of them are correct.
In a recent story aired on KARE-11 TV, Krinkie asserts that local officials “would much prefer to over-value your property-therefore you pay more in taxes-than they would undervalue it and you pay less in taxes. That’s the system. The driver in the system is to collect more money.”
Krinkie’s assertion is flawed on multiple levels. The value that the assessors ascribe to property does not determine how much revenue local governments collect from the property tax; this is determined by city councils and county and school boards when they set their property tax levies in a process which is independent of the valuation process.
While the relationship between property values and the level of property taxation is complex, the assertion that local officials increase property values to collect more from taxpayers is false and reflects either ignorance of the public finance system or a deliberate willingness to mislead.
The argument that assessors willfully over-assess property values for nefarious motives is also false. It is certainly true that during a period in which values are rapidly changing, the assessor’s estimated market value can lag behind the actual sale price of a property. However, this is an administrative problem created by the difficulty involved in tracking rapidly changing values and not an attempt to bilk unsuspecting taxpayers.
According to Assistant Hennepin County Assessor Bill Effertz, there is no good reason for assessors to deliberately understate or overstate property values.
“Local governments gain nothing by deliberately distorting property values,” said Effertz. “It doesn’t bring a single additional penny into the local budget and it undermines the confidence that citizens have in government and the assessment process. It’s a no-win strategy.”
“Assessors are by law required to assess properties at their market value,” Effertz added. “While we cannot anticipate what the market will do, we follow local market trends in each neighborhood and assess property accordingly.”
The extent to which properties are currently over-valued was greatly overstated in the KARE-11 report. Anchor Rick Kupchella stated that “all over the Twin Cities the government is ramping up home values.” In fact, in Hennepin County, 73 percent of single family homes will see a decline in assessed value from 2007 to 2008. Only 6 percent will experience an increase, while 21 percent will remain unchanged.
The situation is similar in Ramsey County, where 77 percent of single family homes will see a decline in assessed value from 2007 to 2008, only 2 percent will increase, and the remainder will remain flat.
A March 30 article in the Star Tribune notes that “City-by-city figures provided to the Star Tribune by most of the metro-area counties show housing market values falling across Ramsey County and in virtually every Hennepin County community, as well as in the larger cities of Dakota and Washington counties, where Stillwater, Cottage Grove and Woodbury came closest to holding their values.”
Krinkie argues that “the market is taking a plunge but the property tax assessment system and the willingness of city and county officials to reduce those valuations-there is going to be a lot of resistance to that.” The fact that assessed values across the metro are falling proves Krinkie’s assertion is false.
Ramsey County Assessor Stephen Baker notes the assessment process is imperfect. “Nonetheless,” Baker argues, “assessors in Minnesota are well trained and apply rigorous techniques to determine property values. Mistakes can and do occur, but there’s an appeal process to address these-and these appeals are taken seriously and acted on appropriately. To hear that someone with Mr. Krinkie’s background has said that assessors are systematically and deliberately over valuing property in order extract more money from taxpayers is very disheartening. He could not be more wrong.”
Recent Pioneer Press articles have described inaccuracies in the system for valuing properties (April 4 and March 27). However, the Pioneer Press also notes that “By industry standards, Twin Cities assessors have a good track record, and it’s been steadily improving since 2000. By 2006, all seven metro counties got passing grades, some even A’s, for accuracy and fairness set by the International Association of Assessing Officers.”
Furthermore, there is no indication from any credible source that assessors are deliberately over-valuing values, as Krinkie alleges. In fact, annual studies from the Minnesota Department of Revenue indicate that housing values are more frequently under-valued by assessors than over-valued.
To be sure, taxpayers have a right to be distressed about rising property taxes. A recent Minnesota 2020 report has shown that the average homestead tax in Minnesota has increased by approximately 70 percent from 2002 to 2008 and by nearly 30 percent after adjusting for inflation.
However, this growth in homestead property taxes cannot be blamed on the actions of assessors. Nor can it be blamed on the actions of local governments; since 2002, the real per capita revenue of Minnesota local governments has declined by nearly ten percent.
The real cause of property tax increases are state aid cuts to local governments-policies endorsed by Krinkie and the Taxpayers League. These aid cuts have compelled local governments to increase property taxes at the same time that they are laying off cops and teachers, increasing class sizes, closing libraries, and cutting funding for transportation and public infrastructure.
The Krinkie rant against assessors is another attempt on the part of the Taxpayers League to use bogus assertions to vilify local governments and justify their “no new tax” agenda. Minnesotans beware: Krinkie and his colleagues at the Fact Slayers’ League are not your friends when it comes to controlling growth in property taxes.