If your home's market value slips, your property taxes go down accordingly, right?
In a word: no.
Homeowners in 10 of St. Paul's 17 planning districts will, on average, see their property taxes rise next year even though their home values are going down.
With home values sliding at different rates in different neighborhoods, some homeowners will be asked to cough up more money than ever, while others will get some tax relief.
The trend is exacerbated by the fact that cash-strapped municipalities are increasing tax levies to make up for cuts in state aid. Taxes are going up overall, though not for everybody.
Here's a third major factor: A new instant credit of sorts allows owners of lower-valued homes to reduce their taxable value by up to $30,000 when calculating taxes. That exclusion is no longer paid for by the state, and cities will have to shift tax burdens from shabbier homes to finer ones to reap the same money.
For instance, in the Merriam Park/Snelling/Lexington/Hamline district, where homes have held their value relatively well, a homeowner with a median-value home will pay 9.1 percent more - an extra $320 - in overall property taxes next year to the city, county and other taxing jurisdictions.
By comparison, for the median-value homeowner in the Payne-Phalen neighborhood, taxes fall about 6.6 percent, due in large part to a dramatic 32 percent decrease in taxable market value.
That 32 percent drop is not all due to sliding home values. The state's new Homestead Market Value Exclusion allows the owner to exclude 40 percent of the property's first $76,000 in home value. That adds up to a maximum exclusion of just over $30,000.
The exclusion decreases for homes valued above $76,000, and disappears entirely for homes valued above $413,000.
"Those Merriam Park, Snelling, Lexington, Hamline folks are higher up in home values, and it means they don't get as much of a reduction from the Homestead Market Value Exclusion," said Chris Samuel, Ramsey County manager of property records and revenue.
A HUNGRY GORILLA
Proponents of the new Homestead exclusion call it badly needed relief for residents in lower-valued properties who may be in danger of foreclosure, but some critics believe property-tax relief should be based on income, rather than home value.
With cities and counties hit by cuts in state aid, a number of taxing authorities have proposed increasing their tax levies, the total amount of property taxes collected from property owners.
Levies and budgets are finalized in December. Barring last-minute changes, St. Paul's 2012 tax levy will increase 6.5 percent over 2011 to reach $100.76 million, the St. Paul School District's tax levy is increasing 3.6 percent to $126 million, and Ramsey County's tax levy is rising 1.7 percent to $271.79 million.
The Metropolitan Council's proposed 2012 property tax levy is $77.7 million, an increase of 3 percent (or $2.3 million) over 2011. The council is debating lowering the increase to 2 percent before the levy is adopted Dec. 14.
The Ramsey County Regional Rail Authority, the St. Paul Port Authority and the St. Paul Housing and Redevelopment Authority are not increasing their tax levies for 2012.
What's this mean for the typical St. Paul homeowner? The answer is what you pay largely varies by where you live. That's because tax levies are like a big stew being prepared for a hungry gorilla.
Even if the amount of stew stays the same or increases only slightly, one cook (or homeowner) contributing fewer ingredients (or taxes) to the stew forces the next cook to contribute more.
When one homeowner's home value slides dramatically and his or her property taxes drop, someone else whose home value slid less dramatically has to contribute more.
WHERE THE SLIDE IS LESS DRAMATIC
In the Merriam Park/Snelling/Lexington/Hamline district, the market value of a median-value house is expected to drop 8.9 percent next year, from $247,400 to $227,500.
Instead of dropping in step, annual property taxes will increase more than 9 percent for that house, from $3,523 to $3,843. That's an overall tax increase of $320, the largest percentage increase and second-largest dollar increase in the city.
"To the extent that most of the other areas are decreasing in value faster than the Merriam Park area, Merriam Park homes are holding their value much better, so they're a larger share of the tax base," Samuel said. "Their taxes increase as a result of that."
Along a similar vein, Summit Hill homeowners will see property values drop 5.7 percent, but taxes increase 8.2 percent, or $412. Those who live in the Macalester-Groveland neighborhood will notice property values drop almost 9 percent, but their taxes go up 7.4 percent, or about $276.
The Highland, Como and Hamline-Midway neighborhoods will also experience noticeable tax increases of 7.8 percent, 6.9 percent and 5.2 percent, respectively.
'HOUSE VALUE IS RELATIVE'
At the other end of the spectrum, property taxes will drop in seven planning districts, none more so than the Payne-Phalen neighborhood. After the Homestead Market Value Exclusion is applied, market values there are tumbling more than 32 percent, the median home falling from $116,700 to $79,100.
As a result, property taxes for that house will go from $1,465 to $1,369, a decrease of $96, or 6.6 percent, the largest percentage and dollar decrease in the city.
In the Thomas-Dale neighborhood, where market values are poised to tumble 36 percent to just under $62,000 after the exclusion, property taxes would be $1,079, instead of $1,147 at the median. That's a drop of $68, or 5.9 percent.
John Mannillo, a downtown developer and Highland Park resident who ran unsuccessfully for St. Paul City Council, notes property taxes rose 7.8 percent in the neighborhood where he lives, despite an 8.7 percent drop in the median market value.
"Yeah, Highland Park is shouldering a greater burden," he said. "I talk about it more than most people. They don't understand why, if their house values go down, they still have to pay more taxes. Well, the bills aren't going down for the city. And your house value is relative to other homes."
Ramsey County sent out "Truth in Taxation" statements Friday, and they should arrive at residents' doors any day. The statements provide an overview of all the property taxes the homeowner will likely pay if proposed tax levies are adopted as expected by Dec. 14.
Frederick Melo can be reached at 651-228-2172.
TAX HEARINGS
Ramsey County will have a public budget and property tax hearing at 6:30 p.m. Nov. 28 at Roseville Area High School. The city of St. Paul will hold its own budget and tax hearing at 6 p.m. Dec. 7 at City Hall.
ON THE WEB
Ramsey County property and taxes: co.ramsey.mn.us/prr
City of St. Paul 2012 budget: 1.usa.gov/SPbudgetinfo
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