Sen. Lucero visiting several STMA schools Tuesday this week during 'Principal for a Day' shadowing Principals Peterson and Kelly, meeting students and teachers, and a legislative Q&A with district staff! The experience, passion, and dedication of the incredible teachers and staff in our great community is second to none!!

 

 

 

Dear Friends and Neighbors,

 

We’re officially in the second week of 2024, I sincerely hope the new year is off to a good start for you! At the same time, Minnesota is facing significant challenges now and into the foreseeable future in different areas of our lives. Unfortunately, many of the challenges facing hardworking Minnesotans are the direct result of incredibly terrible policy promoted and passed over the last several years creating a detrimental compound impact.

 

Among the issues I’m receiving a large amount of feedback from across our community is soaring property taxes. People are justifiably angry as taxes continue to take a larger bite out of the family budget, especially those on fixed incomes. Inflation has already significantly dented the family budget and higher property taxes is making the problem even worse.

Inflation exploded January 2021 when Biden was sworn into office. If you are not making least $11,434 more TODAY vs. JANUARY 2021, you have a lower quality of life as a direct result of Biden and Democrat failed policies negatively impacting your ability to buy essentials.

 

While the topic of property taxes can get lengthy and complex beyond what is possible in an email update, I wanted to touch on the topic from a high-level overview.

 

Several dozen property categories exist in MN. I’ve included just a handful of the different types below. Different property types are taxed at different rates. The important factor to know is the tax rate is higher on commercial and industrial properties (e.g., business parks, strip malls, office buildings, gas stations, childcare buildings, etc.) than on residential properties.

• Residential homestead
• Residential non-homestead
• Seasonal/recreational
• Commercial/Industrial
• Agricultural

 

Tax value is established on January 2 each year to be used to calculate tax liability in the following year. Example:

• Property value established January 2, 2024 will be used to calculate tax liability for property taxes paid in 2025
• Property value established January 2, 2023 will be used to calculate tax liability for property taxes paid in 2024
• Property value established January 2, 2022 will be used to calculate tax liability for property taxes paid in 2023

 

Property owners receive a letter in March each year informing them of the their property’s tax value determined two months earlier on January 2 by the tax assessor. If a property owner disagrees with the tax assessed value, the letter contains instructions to attend their Local Board of Appeal and Equalization meeting or their County Board of Appeal and Equalization meeting to dispute the value. The letter contains the date/time of the meetings. The important thing to remember is the tax value established in the current year is used calculate tax liability in the next year.

 

Also in March, property owners receive a letter for their property taxes due by May 15 and October 15 of the current year. Example:

• The letter each property owner will receive in March 2024 for taxes due May 15, 2024 and October 15, 2024 will be based on the property taxable value established January 2, 2023

 

Property owners receive a letter in November each year informing them of their proposed tax liability for taxes due in the next year. The letter also contains instructions to attend the Truth in Taxation meeting. Example:

• Letter received November 2023 will list the proposed tax liability for taxes due in 2024, based on the property value established January 2, 2023
• Letter received November 2024 will list the proposed tax liability for taxes due in 2025, based on the property value established January 2, 2024

 

The proposed property taxes will be the sum of proposed tax levies from multiple units of government:

• Local city or township
• School district
• County
• State

 

The above can be overwhelming if this is the first time reading about the property tax process, but the above is just the tip of the iceberg. I will use the remainder of this email to briefly touch on and connect the dots how societal factors are directly resulting in higher property taxes.

 

As I mentioned above, property tax liability is a function of property value and tax rate based on property category type. Generally speaking, the value of residential properties is established by comparing to the recent sales of similar residential properties in the neighborhood. The value of commercial property such as strip malls and office buildings, however, is determined very differently. Generally speaking, commercial properties are owned by investors and are leasing to business tenants. Rates of return based on rents and vacancies greatly influence the value of the commercial property. Higher vacancies equals lower rates of return which in turn reduce the value of the commercial property and thus reduce that property’s tax liability.

 

The law of supply/demand and the cost of new construction are raising the values of residential properties. Government mandates are directly responsible for making new construction more expensive in Minnesota than in surrounding states. Because of the incredible demand for housing, because fewer existing homeowners are selling due to their golden handcuffs of being locked into fantastically low mortgage rates of ~3%, and because the cost of new construction is so incredibly expensive due to government over-regulation, the value of all residential property is increasing. Higher residential property values is one of the key components influencing higher property taxes. The societal factor is the mandates Democrats have passed over the years driving up the cost of new construction and remodeling.

In the last few years, several additional societal factors have occurred:

• Democrat demands to defund and dismantle police while sitting on their hands as thug rioters ran around emboldened criminals of all types resulting in skyrocketing shootings, carjackings, and other violent crime
  • Skyrocketing crime caused people not to frequent establishments for entertainment, eating out, etc.
  • Commercial properties owners must lower their rents in response resulting in a lower rate of return and thus lower property tax value of commercial buildings
• Democrat mandates to close the doors of small businesses during the pandemic while the doors of big business were allowed to remain open meant many small businesses did not survive leaving vacancies in the space they previously leased
  • Higher vacancies in commercial properties mean lower rate of return and lower property tax value of commercial buildings
• Changing work from home policies by many employers are leaving many office buildings with high vacancies
  • Higher vacancies in commercial properties mean lower rate of return and lower property tax value of commercial buildings

 

The rising costs due to inflation from the Federal Reserve printing more and more money out of thin air combined with mandates from Democrats at the state level force local governments to spend more money. The dollar amounts levied by local governments are spread across all property types within the local government’s boundary. Because commercial property is lowering in tax value generally speaking and because residential property is increasing in value, residential property owners are paying an increasing share of the amount levied.

 

One additional piece to add before concluding is the Homestead Market Value Exclusion. For over a decade, the Homestead Market Value Exclusion has phased out residential homesteads values over $413,800. In 2024, the value of many homes in our community far exceed $413k preventing middle class homeowners from seeing any sort of property tax relief. In a rare show of concern for taxpayers, the Democrat majority included a provision in their tax bill last year increasing the exclusion to $517k. While this is a step in the right direction, it still doesn't fully acknowledge how much more Minnesotans are paying for residential homesteads today. The $517k exclusion Democrats proposed only provides a 25% increase to the exclusion value set in 2012. Meanwhile, average home prices have not only grown drastically more than 25% since 2012, they have grown more than 25% in just the last few years. On the Senate Floor I offered an amendment in my attempt to raise the exclusion to $650,000 to ensure many more middle class families and those on fixed incomes increasingly being priced out of their homes as they appreciate in value, receive property tax relief. Unfortunately, the Democrat majority voted down my amendment. My remarks on the Senate Floor can be viewed at the following link here.

 

True long-term solutions I continue to push for include:

• Supporting our law enforcement professionals
• Getting serious about punishing criminals to deter and reduce crime which in turn will help increase security/confidence of Minnesotans to venture out
• Reducing the government over-regulation making housing more expensive in Minnesota
• Reduce the state mandates of local government that result in little else but make everything more expensive

Staying In Touch

 

Each and every day I’m continuously humbled at the opportunity to represent and fight for the values and priorities of our great community!

 

Please contact me to share any issues, concerns, or feedback you have to assist me best represent you. The best way to reach me is by email at [email protected] or by phone at 651-296-5655.

 

Sincerely,

Eric Lucero

 

State Senator

District 30

Rockford Township, Hanover, Saint Michael, Albertville, Otsego, Elk River, Nowthen, Western Oak Grove

Capitol Address

95 University Avenue W.
Minnesota Senate Bldg. 2413
St. Paul, MN 55155

651-296-5655