Why Property Tax Changes Year to Year

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You may be wondering why the tax of your property changed from last year.  Its the same amount of property why would you have to pay more or less!  Well each year your property tax is calculated by many different factors.  Ive distilled these factors into fourteen essential reasons why you will see a difference in your property tax.

1. The Market Value of your Property has Changed

Each parcel of property is assessed at least once every five years and a sales ratio study is done to determine if the property is assess similarly to like properties.  If not, the Commissioner of Revenue may issue an ‘order’ that would affect the taxable value of a parcel.

Additions and improvement made to a property generally increases its market value.

2. Market Value of other Properties in the Area have Changed

If the market value of a property increases more or less than the average increase or decrease in a taxing district, the taxes on that property will also change.

New construction in a taxing district increases the tax base and will affect the district’s tax rate.

3. State General Property Tax has Changed

The state legislature directly applies a State General Property Tax to commercial/industrial and season/recreational property classes.

4. The Budget of your City Changed

Each year, cities review the needs and wants of their citizens and how to meet those needs and wants.  This is called ‘discretionary spending’ in the city budget.  Also included in the budget is non-discretionary spending which is required by state and federal mandates and court decisions and orders.

5. The Township Budge Changed

Each March, townships set the levy and budget for the next year.

6. County Budget Changed

Each year, counties review the needs and wants of their citizens and how to meet those  discretionary needs and wants.  In addition, also included in the county budget is non-discretionary spending which is required by state and federal mandates and court decisions and orders.  As much as sixty to eighty-fi ve percent of the county expenditures are used
to deliver mandated services.

7. The Budget of the School District Changed

The Legislature determines basic funding levels for K-12 education and mandates services that schools must perform.  On average, approximately seventy percent of school costs are paid by the state.

Local school districts set levies for purposes including safe school and community education, etc.

8. Special District Budget Change

Special districts such as the Metropolitan Council, hospital districts, watershed districts, drainage districts, etc. set levies to balance their budgets.

9. Special Assessment to your Property Tax

Water lines, curb and gutter, and street improvements that directly benefi t your property may be funded, in whole or in part, through a special assessment that is added to your tax bill.

10. Voters Approved more Money for a School

Local referendums may be held for local government construction projects, excess operating levies for schools or many other purposes.

Referendum levies may be spread on the market value or the tax capacity of a property depending on process and type of referendum levy.

11. Fedral or State Mandate Changes

Both the state and federal governments require local governments to provide certain services and follow certain rules.  These mandates often require an increase in the cost  and level of service delivery.

12. Aid or Revenue for State or Fedral Goverment Changed

Each year the state legislature reviews and adjusts the level of funding for a variety of aids provided to local governments including Local  Government Aid and County Program Aid. The formulas for how aid is determined and distributed among local governments may have
changed.

While direct aid and revenue from the federal government to local governments has declined greatly in recent years, federal revenue continues to be a key portion of the local government revenue stream and that revenue stream may have changed.

13.  State Legislature Changed Tax Base for Types of Properties

A change in class rates will require a change in the tax rate to raise the same amount of
money.

14. Other State Law Changes have Adjusted Tax Base

Fiscal disparities, personal property taxes on utility properties, limited market value, and tax increment fi nancing are example of laws that affect property taxes.