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Your letter: Old Market Value Homestead Credit program was broken

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opinion Wadena, 56482
Wadena Minnesota 314 S. Jefferson, P.O. Box 31 56482

There are some things to clear up regarding homestead tax credits. The Legislature did not eliminate property-tax relief for homeowners and it also did not cause automatic property-tax increases.

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It seems confusion on these fronts has arisen after the Legislature overhauled the Market Value Homestead Credit program this year. A change was needed because the old program was broken. Local governments were relying on the state to reimburse them for tax credits provided to homeowners, but the state was not living up to its end of the deal. In fact, the state had only fully reimbursed local governments in just one year the credit has been in existence. This lack of full funding put local governments in a bind and caused them great budget uncertainty.

The new tax bill the Legislature passed and Gov. Mark Dayton enacted includes a new Homestead Market Exclusion, which replaces the unreliable Market Value Homestead Credit program. The League of Minnesota Cities, the Minnesota Township Association and the Minnesota Inter-County Association all supported this change.

Our new program is modeled after one that has been successful in other states and the key benefit goes directly to taxpayers. The amount homeowners will be taxed is reduced on the front end instead of offsetting a portion of property taxes on the back end as the old system did.

The new system allows for the elimination of the MVHC without a significant increase in homeowner property taxes by having all types of property share the burden of providing the tax relief to homeowners. The cost of the formerly state paid credit is now shifted relatively evenly among all property taxes (including homesteads).

This will not lead to automatic property-tax increases. A number of cities are reducing their tax levies and others are keeping them level.

Anoka, for example, is reducing its taxes by 7 percent. Perham has a moderate 2 percent increase.

It is up to local government officials to decide how much they spend and it is up to local citizens to remain active in this process. We are still in the process of adjusting to a new economic era and our local officials are re-examining spending priorities. The Legislature did the same thing this year in order to erase a $5 billion budget shortfall.

Families and businesses know what this is like as well.

That's not to say there will not be glitches that arise as we make the transition to our new program. We will keep an eye on the situation and act accordingly if we encounter hiccups in the changeover.

This is a very complex issue with many wrinkles, but I hope this clarifies what our new program means to homeowners. Please feel free to contact me at rep.mark.murdock@house.mn or at (651) 296-4293 if you have any questions.

Rep. Mark Murdock

R-Ottertail

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