III.1. 2024 Budget Meeting, 2024 Tax Levy, 2024 HRAEDA Levy and General and Special Revenue Fund Budgets; Bishop CITY OF HOPKINS
City Council Report 2023-132
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: December 4, 2023
Subject: 2024 Budget Meeting, 2024 Tax Levy, 2024 HRA/EDA Levy and General
and Special Revenue Fund Budgets
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO Adopt Resolution 2023-050 Approving the 2024 Tax Levy, 2024 HRA Levy
and Adopting the 2024 General and Special Revenue Fund Budgets.
OVERVIEW
A draft version of the 2024 Budget and Tax Levy was prepared by staff and presented
to City Council on July 18th. Based on Council direction, the budget was reviewed and
proposals with lesser increases were discussed on August 15th. The City also hosted a
budget engagement session on August 14th. On September 12th a version of the tax
levy was reviewed with a 4.86% increase compared to 2023. On September 19th, the
preliminary levy of $19,678,939, a $912,715 or 4.86% increase from 2023
was approved. Staff's recommendation is to adopt this levy as Final.
The purpose of tonight’s meeting is to hold a public hearing on the 2024 tax levy. The
final levy must be adopted and submitted to Hennepin County by December 28th.
SUPPORTING INFORMATION
•Resolution 2023-050
•Tax Levy and Budget Overview
•HRA/EDA Levy Overview
•Public Safety Funding Overview
•2024 General Fund and Special Revenue Fund Budgets
•2024 Tax Levy Summary
•Truth in Taxation Statements Summary
•Association of MN Counties – “Why Property Taxes Vary from Year to Year”
Finance Department
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2023-050
RESOLUTION APPROVING THE 2024 TAX LEVY, 2024 HRA LEVY AND ADOPTING
THE 2024 GENERAL AND SPECIAL REVENUE FUND BUDGETS
THEREFORE BE IT RESOLVED, that the City Council of the City of Hopkins hereby
approves the following sums be levied for 2024 upon the taxable property in the City of
Hopkins, for the following purposes:
General Levy
General $15,571,326
Special Levies
Debt Levies
2014A GO Bonds 97,000
2015A GO Street Reconstruction Bonds 250,000
2015B GO Tax Abatement Bonds 125,000
2016A GO Improvement Bonds 100,000
2016B GO Tax Abatement Bonds 36,781
2016C GO Bonds 200,000
2017A GO Street Reconstruction Bonds 915,000
2017B GO Tax Abatement Bonds 102,061
2018A GO Equipment Certificates 79,487
2018A GO Improvement Bonds 450,000
2019A GO Bonds 375,000
2019B GO Refunding Bonds 115,300
2020A GO Bonds 193,125
2020B GO Refunding Bonds 308,114
2021A GO Bonds 208,662
2022A GO Bonds 325,072
2023A GP Temporary Bonds 227,011
Subtotal Special Levies $4,107,613
Total Levy $19,678,939
HRA LEVY
Housing & Redevelopment Authority Levy $487,653
This levy is made based on current law and the 2024 General Fund Budget of
$18,421,803
That based upon staff analysis of special assessments currently levied for Permanent
Improvement Bonds, alternative revenue sources for the Capital Improvement Bonds
and Equipment Certificates, and available reserves within all debt service funds listed
below, that the debt service levies for 2024 for the following issues be levied at amounts
less than provided by the bond covenants.
Bond Issue
$1,895,000 GO Bonds of 2014A $ 97,000
$4,100,000 GO Street Reconstruction Bonds of 2015A $250,000
$4,335,000 GO Improvement Bonds of 2016A $100,000
$1,875,000 GO Bonds of 2016C $200,000
$11,795,000 Street Reconstruction Bonds of 2017A $915,000
$3,170,000 GO Tax Abatement Bonds of 2017B $102,061
$6,715,000 GO Improvement Bonds of 2018A $ 79,487
$3,285,000 GO Tax Abatement Bonds of 2018B $ 0
$12,185,000 GO Bonds of 2019A $375,000
$2,015,000 GO Refunding Bonds of 2019B $115,000
BE IT FURTHER RESOLVED, that the following amounts are budgeted for the Special
Revenue Funds:
State Chemical Assessment $65,000 Economic Development $520,278
TIF 1.2 Entertainment District $14,228 MN Public Safety $439,095
Parking $159,894 Race & Equity Initiative $6,000
Communications $281,487 Depot $183,832
TIF 2.9 Oakes of Main $2,095 TIF 2.11 Super Valu $2,875,266
TIF 1.4 Marketplace and Main $214,948 TIF 1.5 the Moline $2,530,195
Arts Center $1,144,097 Sustainability $385,000
Adopted by the City Council of the City of Hopkins this 4th day of December, 2023.
By:___________________________
Patrick Hanlon, Mayor
ATTEST:
_______________________________
Amy Domeier, City Clerk
Tax Levy and Budget Overview
The Final 2024 levy would be set at $19,678,939, a $912,715 or 4.86% increase
from 2023. City taxes on a median value home ($369,300) will be $2,187, a $1 or 0.1%
decrease from 2023.
The two largest areas supported by the levy are public safety and capital projects &
debt. This is a breakdown of City property taxes:
Median
Value Home
($369,300) Percentage
Public Safety 823$ 37.6%
G eneral Government 343$ 15.7%
Public Works 252$ 11.5%
Parks and Recreation 145$ 6.6%
Pavilion 49$ 2.2%
Activity Center 40$ 1.9%
Arts Center 38$ 1.8%
Capital projects & debt 497$ 22.7%
Total 2,187$ 100.0%
Public Safety is comprised of police, fire and inspection departments. In total they make
up 37.6% of the levy.
The Police Department’s Mission is to serve the community with Honesty, Integrity and
Respect. They accomplish this through community engagement, relationship building
and providing education and youth initiatives. They also responded to 23,718 calls for
service in 2022. They work diligently to prevent and deter crime. The Police
Department will add two positions in 2024 funded through one-time public safety
funding.
The Fire Department makes a positive difference everyday by providing quality fire
response, prevention services, emergency medical, hazardous materials handling and
emergency preparedness. In 2022, they responded to 1,713 calls. Their average
response time is 4.6 minutes. The Fire Department conducted a staffing study in
2023. They will hire an Assistant Fire Chief in 2023 funded through one-time public
safety funding.
Inspections – this is the smallest department within public safety and accounts for
1.6% of the tax levy. The Inspections Department budget is primarily funded through
charges for service. The 2024 budget includes revenues of $735,400 and
expenditures of $1,173,086.
Capital projects and debt is the next largest portion of the levy making up 22.7%. It
supports street reconstruction, capital projects at municipal buildings and equipment
purchases.
The City is completing a street reconstruction plan paid for through bond issuance,
special assessments and user charges for water, sewer and storm-sewer. All streets in
Hopkins are planned to be reconstructed by 2030. Continuing this program ensures the
future preservation of our streets and helps maintain the quality-of-life Hopkins residents
have come to expect.
In order to fully realize the benefits of Southwest Light Rail the city invested in 8th
Avenue and created the Artery. The Artery is a bike, pedestrian and vehicle connection
and community space between a future light rail transit station and the City’s historic
downtown. The $5.7 million project leveraged $2.6 million of grants from Metropolitan
Council, Hennepin County and Three Rivers Park District.
The City has also invested in the Blake Road Corridor. The City is adding several
pedestrian friendly amenities including: multi-use trails, landscaped boulevards and
upgraded street lighting. The Road will also be upgraded to handle future traffic and
development demands. The $16 million project will receive reimbursements from
Hennepin County ($8 Million) and utilize Municipal State Aid of ($3 million).
The City’s share of the Artery project and Blake Road reconstruction were funded with
debt. They also took advantage of limited outside funding sources in order to make
needed improvements. Delaying the projects would likely result in higher costs and a
larger City-share of the overall cost.
The Arts Center levy being proposed is $345,000 or 1.8% of the total levy. The Arts
Center is a premiere cultural and artistic destination drawing over 250,000 visitors
annually. The City believes that it is an excellent economic development tool that
helped make Mainstreet vibrant and authentic. With this levy, the Arts Center will
continue to be an asset to the Community.
The Activity Center is a separate facility that is included in the general fund budget. The
general fund levy amount being used for the Activity Center is $364,138 or 1.9% of the
levy. The Activity Center’s mission is to provide pathways to “Experience the Upside of
Aging”. It is a gathering place for mature adults. It is also used as a rental facility and
community space.
The Pavilion levy being proposed is $440,000 or 2.2% of the levy. In 2018, the Pavilion
was upgraded and expanded. The City needed to complete a project to replace a 27-
year-old refrigeration system that was unreliable, developing leaks and being phased
out by the EPA. The City was able to increase the scope of the project to include
remodeled locker rooms, shower rooms, expanded lobby, remodeled offices, remodeled
concession stand and expanded restroom facilities after receiving contributions from
Hopkins School District ($1.0 Million) and Hopkins Youth Hockey Association ($1.0
Million). The project still required bond proceeds of $3.1 million to complete. The debt
service for the bonds will be paid with a Pavilion levy through 2033.
HRA/EDA Levy
The HRA/EDA Levy is the main revenue source for the City’s Economic Development
Fund and plays an important role in the City’s continued efforts for redevelopment.
There are levy limits based on 0.01850% of the City’s estimated market value. The
market value used for the 2024 Levy is $2,688,722,500, resulting in a maximum tax levy
of $497,414 which would be an increase of $45,883 or 10.16% from 2023. The
proposed levy is $487,653 a $36,122 or 8.00% increase from 2023.
Tax Year
Maximum
Allowable Levy
HRA/EDA
Levy $ Increase % Increase
2019 350,154 350,154 21,137 6.81%
2020 367,951 367,951 17,797 5.08%
2021 407,727 378,070 10,119 2.75%
2022 434,750 391,302 13,232 3.50%
2023 451,531 451,531 60,229 15.39%
2024-Proposed 497,414 487,653 36,122 8.00%
For the proposed levy, taxes on a median value home (369,300) will be $61, a $1 or
2.33% increase. The HRA/EDA levy is a separate levy and appears on tax statements
under Other Taxing Districts.
Economic Development Fund
The Fund coordinates the economic development processes not directly funded by
specific project budgets and also supports Artstreet, the Arts Center, the Façade
Improvement program, and marketing efforts. The main revenue sources of the fund are
the HRA/EDA tax levy and excess tax increment financing. The 2024 budget includes
$100,000 for the Façade Improvement program (staff is reviewing current criteria to
determine any modifications needed in 2024).
Public Safety Funding
During 2023 Legislative Session, $210 million of on-time public safety aid was
authorized for Cities. The aid can be spent on fire, police, emergency medical or other
public safety needs. Hopkins will receive a one-time payment of $828,185. The
following budget is recommended for 2024 and 2025.
2024 2025 Total
Police Officer 1 (April 1st)87,423 121,135 208,558
Police Officer 2 (April 1st)87,423 121,135 208,558
Canine Start-Up costs 46,420 - 46,420
License Plate Readers 13,000 - 13,000
Fire Captain 139,829 146,820 286,649
Fire Hose 10,000 - 10,000
Fire MDC 40,000 - 40,000
Fire Records Management System 15,000 - 15,000
Total 439,095 389,090 828,185
City of Hopkins
General Fund Revenue Budget
For the Year Ending December 31, 2024
RECOMMENDED
December 4, 2023
Department 2023 Budget 2024 Budget
% Increase
(Decrease)
Property Taxes 14,020,781 14,511,326 3.50%
Intergovernmental Revenue
Local Government Aid 925,794 1,081,012
Intergovernmental Revenue - Other 705,000 797,000
Total Intergovernmental Revenue 1,630,794 1,878,012 15.16%
Licenses, Permits & Fines
Court Fines & Penalties 176,000 176,000
Building Permits & Inspections 557,000 563,000
Inspection Fines & Citations 3,000 3,000
City Clerk - Business Licenses 8,000 8,900
PD - Liquor, Animal Licenses & Penalties 101,800 101,800
Fire - Licenses & Permits 4,000 4,000
Public Works - Licenses & Permits 19,415 19,615
Planning & Zoning - Licenses & Permits 1,000 2,000
Total Licenses, Permits & Fines 870,215 878,315 0.93%
Charges for Service
Finance Department 5,500 5,500
Assessing 3,000 3,000
Inspections 175,450 175,450
Police 35,000 35,000
Fire 10,500 10,500
Public Works 3,150 3,150
Activity Center 94,300 118,500
Total Charges for Service 326,900 351,100 7.40%
Miscellaneous Revenue
Franchise Fees 296,200 346,200
Miscellaneous 20,250 25,250
Finance Department 3,000 3,000
Police 500 500
Fire 3,500 3,500
Public Works 5,300 10,600
Activity Center 11,000 14,000
Total Miscellaneous 339,750 403,050 18.63%
Total Revenues 17,188,440 18,021,803 4.85%
City of Hopkins
General Fund Expenditure Budget
For the Year Ending December 31, 2024
RECOMMENDED
December 4, 2023
Department 2023 Budget 2024 Budget
% Increase
(Decrease)
City Council 105,851 133,032 25.68%
Administrative Services 502,931 564,399 12.22%
Information Technology 483,570 650,365 34.49%
Diversity, Equity & Inclusion 33,530 133,530 298.24%
Finance 744,883 724,979 -2.67%
Legal 225,000 250,000 11.11%
Municipal Building 380,832 416,207 9.29%
City Clerk 245,466 322,770 31.49%
Inspections 1,062,119 1,173,086 10.45%
Police 6,958,766 7,129,993 2.46%
Fire 1,633,390 1,709,791 4.68%
Public Works 3,632,027 3,899,510 7.36%
Recreation 306,993 276,441 -9.95%
Activity Center 486,192 554,995 14.15%
Planning & Zoning 170,842 224,193 31.23%
Community Development 126,848 129,312 1.94%
Tuition Reimbursement 19,200 19,200 0.00%
Contingency 50,000 50,000 0.00%
Transfer to Depot/ACE Program 20,000 60,000 200.00%
Total Expenditures 17,188,440 18,421,803 7.18%
City of Hopkins
Special Revnue Funds Budget
For the Year Ending December 31, 2024
RECOMMENDED
December 4, 2023
Revenues
Fund No.2023 Budget 2024 Budget
% Increase
(Decrease)
203 State Chemical Assessment 65,000 65,000 0.00%
204 Economic Development 571,531 557,706 (2.42%)
211 TIF 1.2 Entertainment District 45,000 45,000 0.00%
212 MN Public Safety - 439,095 100.00%
214 Parking 143,250 125,000 (12.74%)
216 Hopkins Race & Equity Iniative 6,000 6,000 0.00%
217 Communications (Cable TV)233,000 230,000 (1.29%)
219 Depot Coffee House 248,224 203,832 (17.88%)
229 TIF 2.9 Oaks of Main 250 - (100.00%)
231 TIF 2.11 Super Valu 2,820,000 2,820,000 0.00%
233 TIF 1.4 - Marketplace & Main 226,000 226,000 0.00%
234 TIF 1.5 - The Moline 2,515,000 2,515,000 0.00%
250 Arts Center 1,164,132 1,172,650 0.73%
260 Sustainability - 385,000 100.00%
Expenditures
Fund No.2023 Budget 2024 Budget
% Increase
(Decrease)
203 State Chemical Assessment 65,000 65,000 0.00%
204 Economic Development 519,236 520,278 0.20%
211 TIF 1.2 Entertainment District 16,046 14,228 (11.33%)
212 MN Public Safety - 439,095 100.00%
214 Parking 158,610 159,894 0.81%
216 Hopkins Race & Equity Iniative 6,000 6,000 0.00%
217 Communications (Cable TV)293,596 281,487 (4.12%)
219 Depot Coffee House 263,224 183,832 (30.16%)
229 TIF 2.9 Oaks of Main 8,591 2,095 (75.61%)
231 TIF 2.11 Super Valu 3,700,000 2,875,266 (22.29%)
233 TIF 1.4 - Marketplace & Main 215,828 214,948 (0.41%)
234 TIF 1.5 - The Moline 2,487,887 2,530,195 1.70%
250 Arts Center 1,104,132 1,144,097 3.62%
260 Sustainability - 385,000 100.00%
Fund
Fund
City of Hopkins
Tax Levy
For the Year Ending December 31, 2024
RECOMMENDED
December 4, 2023
Actual Recommended % Increase
Purpose FY2023 FY2024 (Decrease)
General Operations
General Fund 13,935,781 14,426,326 3.52%
Capital Levy - - 100.00%
Arts Center 347,697 345,000 -0.78%
Pavilion Fund 340,000 440,000 29.41%
Equipment Replacement 250,000 360,000 100.00%
Permanent Improvement - - 100.00%
Total General Operations 14,873,478 15,571,326 4.69%
Debt Levy 3,892,746 4,107,613 5.52%
Total Levy 18,766,224 19,678,939 4.86%
Truth in Taxation Summary
Based on preliminary levies, the total taxes on a median value home in Hopkins will
increase by $83 or 1.6%. Hennepin County and Hopkins Public Schools adopted
preliminary levy increases of 6.50% and 7.68%, respectively.
Actual 2023 Preliminary 2024 % Increase
Median Value Home 361,000 369,300 2.30%
Hennepin County 1,273.05 1,303.93 2.43%
City of Hopkins 2,188.81 2,186.71 -0.10%
School District 270 1,430.89 1,488.42 4.02%
Metropolitan Council 70.29 67.36 -4.17%
Other Special Taxing Districts 231.66 231.26 -0.17%
5,194.70 5,277.68 1.60%
TOTAL TAX COMPARISON
Hennepin County provides Cities with summarized data from Truth in Taxation
statements. The following chart shows the percentage of each property type that will
see a decrease or increase in total taxes based on preliminary levies. Residential
properties include single family houses, condominiums, townhomes and duplexes.
Apartments will see the largest decreases.
Residential Apartment
Commercial/
Industrial
Decrease/No Change 28.77% 74.60% 27.38%
Increase .1% - 4.9%45.67% 15.87% 16.72%
Increase 5.0% - 9.9%19.92% 7.94% 27.00%
Increase 10.0% - 14.9%3.97% 0.00% 12.93%
Increase 15.0% and Over 1.67% 1.59% 15.97%
*based on total taxes
CITY OF HOPKINS
The changes are caused by both the preliminary property tax levies and changes to
estimated market values. The value of residential and apartments has grown at a slower
rate than the value of commercial/industrial properties. This causes a shift of property
taxes to commercial/industrial. Most Cities in Hennepin County are experiencing similar
trends. This chart shows the changes in total taxes for residential properties in Hopkins
and Hennepin County.
City of
Hopkins
Suburban
Hennepin
County
Hennepin
County
Decrease/No Change 28.77% 19.16% 24.07%
Increase .1% - 4.9%45.67% 40.35% 38.40%
Increase 5.0% - 9.9%19.92% 29.13% 27.31%
Increase 10.0% - 14.9%3.97% 7.52% 6.98%
Increase 15.0% and Over 1.67% 3.84% 3.24%
*based on total taxes
RESIDENTIAL SINGLE FAMILY PROPERTIES
A publication of the Association of Minnesota Counties
THE MARKET VALUE OF A PROPERTY MAY CHANGE.
• 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 assessed 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.
THE MARKET VALUE OF OTHER PROPERTIES IN
YOUR TAXING DISTRICT MAY CHANGE, SHIFTING
TAXES FROM ONE PROPERTY TO ANOTHER.
• 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.
THE STATE GENERAL PROPERTY TAX MAY CHANGE.
• The state legislature directly applies a State General Property Tax to commercial/industrial
and season/recreational property classes.
Fourteen Reasons
WHY PROPERTY TAXES VARY
FROM YEAR TO YEAR
A publication of the Association of Minnesota Counties
THE CITY BUDGET AND LEVY MAY CHANGE.
• 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.
THE TOWNSHIP BUDGET AND LEVY MAY CHANGE.
• Each March, townships set the levy and budget for the next year.
THE COUNTY BUDGET AND LEVY MAY CHANGE.
• 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-five percent of the county expenditures
are used to deliver mandated services.
THE SCHOOL DISTRICT’S BUDGET AND LEVY MAY
CHANGE.
• 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.
A SPECIAL DISTRICT’S BUDGET AND LEVY MAY
CHANGE.
• Special districts such as the Metropolitan Council, hospital districts, watershed districts,
drainage districts, etc. set levies to balance their budgets.
SPECIAL ASSESSMENTS MAY BE ADDED TO YOUR
PROPERTY TAX BILL.
• Water lines, curb and gutter, and street improvements that directly benefit your property
may be funded, in whole or in part, through a special assessment that is added to your tax
bill.
A publication of the Association of Minnesota Counties
VOTERS MAY HAVE APPROVED A SCHOOL, CITY/
TOWNSHIP, COUNTY, OR SPECIAL DISTRICT
REFERENDUM.
• 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.
FEDERAL AND STATE MANDATES MAY HAVE CHANGED.
• 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.
AID AND REVENUE FROM THE STATE AND FEDERAL
GOVERNMENTS MAY HAVE 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.
THE STATE LEGISLATURE MAY HAVE CHANGED THE
PORTION OF THE TAX BASE PAID BY DIFFERENT
TYPES OF PROPERTIES.
• A change in class rates will require a change in the tax rate to raise the same amount of money.
OTHER STATE LAW CHANGES MAY ADJUST THE TAX
BASE.
• Fiscal disparities, personal property taxes on utility properties, limited market value, and tax
increment financing are example of laws that affect property taxes.
CATEGORICAL AID: Aid given to a local unit of government to be used only
for a specific purpose.
CIRCUIT BREAKER: See “Property Tax Refund.”
CLASS RATES: The percent of market value set by state law that establishes
the property’s tax capacity subject to the property tax.
COUNTY PROGRAM AID: State property tax relief aid to counties, distributed
with a formula based on needs (households on foodstamps, age of the
population, number of serious crimes) and tax base equalization for counties
with smaller tax bases.
EDUCATION AID: The total amount of state dollars paid for K-12 education.
This aid is paid to the school districts.
FISCAL DISPARITIES: A program in the Twin Cities metropolitan area and on
the iron range in which a portion of the commercial and industrial property
value of each city and township is contributed to a tax base sharing pool. Each
city and township then receives a distribution of property value from the pool
based on market value and population in each city.
GENERAL PURPOSE AID: Aid given to units of government to be used at their
own discretion. Examples are Local Government Aid and County Program Aid.
HIGHWAY AID: Motor fuels tax and license tab money the state distributes
to counties, cities and townships for highways and bridges.
HOMESTEAD: A residence occupied by the owner.
INDIVIDUAL INCOME TAX: A state tax on the income of residents and non-
residents with Minnesota sources of income that is deposited into the state
general fund.
LEVY: The imposition of a tax, associated with the property tax.
LEVY LIMIT: The amount a local unit of government is permitted to levy for
specific services under state law.
LIMITED MARKET VALUE: A state imposed limit on property value increases
for the purpose of calculating property taxes.
LOCAL GOVERNMENT AID (LGA): A state government revenue sharing
program for cities with low property wealth or high service burdens that is
intended to provide an alternative to the property tax.
LOCAL SALES TAX: A local tax, authorized by the state, levied on the sale of
goods and services to be used for specific purposes by the local government.
LOCAL TAX RATE: The tax rate usually expressed as a percentage of tax
capacity, used to determine the property tax due on a property.
MARKET VALUE: An assessor’s estimate of what property would be worth
if it were sold.
MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce the property
tax paid by agricultural homesteads to the local taxing jurisdiction.
MARKET VALUE HOMESTEAD CREDIT: The Market Value Homestead Credit
(MVHC) program was eliminated during the 2011 Special Session for taxes
payable in 2012 and beyond. The credit was replaced with a market value
exclusion (defined below). This guide describes the (MVHC) reimbursement
program. The program was designed to provide state-paid property tax relief
to owners of certain qualifying homestead property.
MARKET VALUE HOMESTEAD EXCLUSION: The exclusion reduces the taxable
value of qualifying homesteads. Despite the decreased taxable value, taxes
will increase on most properties including apartments and businesses and
is independent of any action taken by local governments. The exclusion
provides for a portion of each home’s market value to be excluded from its
value for property tax calculations. The amount of value excluded is directly
proportional to the MVHC the home received under the old law. In this way,
each home contributes a smaller amount to each taxing jurisdiction’s tax
base. The tax rate tends to be a little higher because of the reduced tax base,
which is why taxes increase for the other types of property. The tax burden
on any given homestead could be lesser or greater depending upon the mix
of properties in the jurisdiction and the level of the tax rate.
PROPERTY TAX: A tax levied on any kind of property.
PROPERTY TAX REFUND: A partial property tax refund program for those
who have property taxes out of proportion with their income. This program
is available to homeowners and renters.
SALES RATIO STUDY: A study conducted by the
Department of Revenue of open market property sales, which is then
compared to local assessments to ensure that local assessments adequately
reflect the market.
STATE GENERAL PROPERTY TAX: A state-imposed property tax on commercial,
industrial, and seasonal recreational properties.
STATE SALES TAX: A state tax (6.5%) levied on the sale of goods and services
that is deposited into the state general fund.
TAX CAPACITY: The valuation of property based on market value and class
rates, on which property taxes are determined.
Revised October 2014
Glossary of Terms
Association of Minnesota Counties
125 Charles Avenue
Saint Paul, MN 55103-2108
Main Line/Switchboard: 651.224.3344 Fax: 651.224.6540
www.mncounties.org