Total local government property tax levies are proposed to increase 4.9%. The proposed increase for cities is 6.6%.
The Minnesota Department of Revenue (DOR) recently released the annual report on proposed property tax levies for 2022 local government budgets. The proposed levies set by local governments earlier this fall are used to compute the proposed tax statements that are sent to property owners in November.
Except under limited circumstances, final certified property tax levies cannot exceed the proposed levy amount. Permissible exceptions to increase the final levy include:
- Levy increases approved by voters after the proposed levy was set.
- Levies for judgments.
- Certain levies for natural disasters.
According to the DOR, 2022 levies for all cities are proposed to increase 6.6% ($182.6 million) over the final certified 2021 levies.
For comparison, for taxes payable in 2021, cities initially proposed a statewide increase of 4.5%. That amount was later reduced to an increase of 4.0% when final 2021 tax levies were set. The average certified levy increase for cities over the past three years is 5.5%.
Change from 2021 final levy to 2022 proposed levy
Local governments are proposing an increase over their 2021 final levy, as follows:
- Cities: +$182.6 million (+6.6%)
- Counties: +$128.1 million (+3.7%)
- Towns: +$7.4 million (+2.7%)
- School Districts: +$156.4 million (+4.6%)
- Special Districts +$27.9 million (+6.8%)
Impact on individual taxes varies
Increases in property tax levies do not automatically result in increased taxes to individual property owners.
Changes in the valuation of individual properties, newly constructed properties, and other factors can result in tax changes that are either greater or less than the levy increase proposed by taxing entities (city, county, school, etc.) in a particular geographic area.
State programs and city property tax levels
Changes in state aid for recipient cities can also impact city property tax levels. The local government aid (LGA) appropriation for the 2022 distribution was frozen at the 2021 level; however, 96 cities received an additional $5.5 million in 2022 only to prevent a loss of LGA. When 2022 proposed levies and 2022 LGA is combined, the average statewide total city levy increase is 5.6%.
According to the DOR report, 168 cities (20% of all cities) either froze or reduced their proposed 2022 property tax levy. Another 264 cities (31%) proposed levy increases between 0% and 5%.
Cities with proposed increases between 5% and 10% totaled 276 (32% of all cities). A total of 146 cities (16%) proposed increases in excess of 10%.
Cities will finalize their levy amounts by the end of the calendar year. The DOR will release a report on final property tax levies in February or March.