It’s time to set things straight: state public policy leaders are driving up local property taxes. Local government isn’t out of control, spending money willy-nilly on foolishness like libraries, police officers, text books or road grading. Property taxes have jumped because the state isn’t sharing revenue with local units of government, forcing budget cuts and property tax increases.
Local taxpayers are paying more and getting less. I don’t think that I can say it any plainer.
State Capitol budget wrangling seems to be clouding people’s minds. The State Senate majority’s budget plan is significantly different from the State House majority’s plan which, in turn, is radically different from Govern Pawlenty’s plan. Consequently, the highly-selective harping, with one side attacking the others while trying to appear polite and responsible, drowns out the simple declaration that state government has been balancing its budget woes on local governments’ backs.
It’s an inconvenient truth.
This conflict’s roots pre-date the1971 Minnesota Miracle, the current policy crises’ immediate progenitor. Rather, it’s found in Minnesota’s constitution, adopted with our 1858 entry into the Union.
The State of Minnesota retains phenomenal governing and taxation authority, leaving cities, counties and school districts with few substantial powers. Local governments’ principal revenue sources are funds levied through taxing property within its jurisdiction. Minnesota, on the other hand, has vast taxing authority.
The state shares this authority reluctantly.
State public policy leaders have however, from time to time, permitted local governments to selectively piggyback on state taxing authority. Saint Paul, for example, taxes retail sales an additional half-cent to generate funds for capital investment projects. I’m simplifying this a bit but, absent explicit state permission, Saint Paul couldn’t add that half-cent.
Property taxes are regressive. They’re based on property’s relative value rather than on other, more elastic revenue sources. Property holders on fixed incomes, such as retirees, can find themselves having to sell property to meet tax obligations and thus quite neatly demonstrating the regressive taxation principle at work.
But, let’s not lose sight of the key principle: paying for the things that are important.
We pay for schools, police and fire protection, good roads, honest government’s responsible execution, clean air, clean water, public health, and the enforced rule of law because we value the outcome generated by those things. Taxation is simply the method for acting on those priorities. We enjoy a healthy, vigorous debate over what’s worth public investment and what’s not. Drop in on your local school board or city council meeting to witness it firsthand.
This past week, we’ve observed the usual budget debate dust-ups. The Governor’s spokesman, Brian McClung, worked diligently to obscure the Governor’s principle policy impact since taking office. By attacking State Senator Bakk’s proposal, suggesting that it would raise property taxes, McClung neatly avoids noting that Governor Pawlenty’s conservative, “no new taxes” policy has unilaterally and regressively restructured tax revenues for the past six years.
He is, in effect, demanding that we see trees but not the forest. Don’t be misled.
My Minnesota 2020 colleague, Jeff Van Wychen, in his recent report, Minnesota Property Taxes by the Numbers: 2009 Edition, provides the best response. “Since 2002, Minnesota property taxes, in general, and homeowner property taxes, in particular, have increased rapidly…The primary cause of statewide property tax growth is reductions in state aid to local governments. From 2002 to 2008, state aid to local governments declined by $2.4 billion in 2008 dollars.”
Honest public policy debate begins with accurate data. Since 2002, state public policy has persistently and purposefully forced local property tax increases by severing state government’s revenue sharing relationship with local government. Minnesota public policy leaders should stop denying the truth. Until then, accountability and responsibility remain this policy debate’s casualties. Without them, we can’t move Minnesota forward.
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