by Jeff Van Wychen | August 19th, 2009 • Minnesota 2020 Education Fellow John Fitzgerald recently described the pressure that Minnesota school districts are under due to increase voter-approved referendum levies. As a matter of fact, school referendum market value levies have nearly tripled during the tenure of the Pawlenty administration even after adjusting for inflation.
Referendum market value levies hit Minnesota homeowners particularly hard because—unlike ordinary levies—homeowners receive no preferential tax treatment relative to business properties. Because of this, typically an increase in referendum market value levies will result in a larger percentage increase in homeowner property taxes than in business property taxes. This phenomenon is more fully described in “Minnesota Property Taxes by the Numbers: 2009 Edition.”
In the last year of the Ventura administration (school fiscal year 2003, corresponding to tax payable year 2002), the statewide referendum market value levy was $336 per pupil in constant FY 2010 dollars. Seven years of steady erosion in real per capita state aid caused referendum market value levies to escalate steadily. In the current school fiscal year (FY 2010, corresponding to taxes payable in 2009), the statewide referendum market value levy was $915 per pupil.
The growth in school referendum levies has not translated into a net increase in public school revenue. The real per capita increase in all school property taxes—including both referendum and non-referendum levies—has not been sufficient to replace the real per capita decline in state aid. As a result, total real per capita school revenues are less today than when Governor Ventura left office.
As John Fitzgerald noted in his recent article, Pawlenty’s decision to whittle away at state funding for public schools did not result in “no new taxes.” Rather, they resulted in significant property tax increases in the form of referendum levies as school districts scramble to replace cuts in state aid.
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