• The state should increase funding for local government aid and take over more of the cost of k-12 education to reduce property taxes.
• The state should limit the ability of local governments to increase property taxes.
• Local officials should reduce and/or prioritize local spending.
• The state should reduce the property tax burden on homeowners by increasing the share of the property tax paid by businesses.

Property Tax Background: Minnesota's property tax system involves both state and local decisions.  Each year local assessors determine a property’s value.  The state establishes class rates which distribute property tax burden among different property types.  Local governments determine how much they plan to spend and how much will be raised through the property tax.  They state provides some local governments with state aid which might impact their tax and spending decisions. 

In 2001 and 2002, the state assumed more responsibility for funding k-12 education.  Because of that shift to more state funding, net property taxes payable fell from $5.0 billion in 2001 to $4.6 billion in 2002, according to the Minnesota Taxpayers Association.  Since then, property taxes have climbed to an estimated $5.6 billion for 2006, according to the Minnesota Department of Finance Price of Government Report. 

In 2006, home property was 60% of the taxable market value while homes paid 48% of the property taxes.  On the other hand, business property was 12% of the taxable market value but paid 30% of the property taxes.  This shows the impact of the state established class rates which distribute property tax burden among different types of property.