County warns about high tax bills
Many Steele County homeowners are experiencing a bit of sticker shock as they open their mail this week, as rising home values have also driven up property taxes.
County officials said Friday that some Steele County residents may see a 20% increase over their 2021 tax bills.
The process for determining 2023 taxes began in 2020, county administrator Scott Golberg said. Assessor Tom Reineke monitored all home sales between October 2020 through September 2021, “as the base for all evaluations.”
Across Minnesota, officials are required to base home values on market values.
On Jan. 2 of this year, Reineke determined preliminary property valuations; homeowners received those notices in March. The valuation statements do not include estimated property taxes.
In April and May, homeowners can challenge their home value with the assessor’s office and local appeals board. In June, the Board of Equalization finalizes numbers.
“It’s not a real easy process to get your head around,” Golberg said, especially given the time frame.
The rise in residential prices outpaced any other property class, Golberg said, which will lead to change on a larger scale.
“There’s going to be a shift in overall property tax capacity toward residential property,” he explained.
That may change again in 2023. Reineke said he has seen a 30% increase in agricultural property values, which would shift the burden for taxes paid in 2024.
“We’re also looking to increase industrial properties by double digits,” he said, adding the calculations are done differently as those properties don’t sell as often as those in other classes.
Home value increases this year may also affect the break that comes with Minnesota’s Homestead Market Value exclusion, Golberg said. Calculated through a formula, it reduces the market value of homes and farmland including the house, garage, and surrounding one acre of land, for properties up to a value of $413,800.
As home values rise, the exclusion amount drops, leading to a higher tax bill.
People across the state are feeling the pain driven by double-digit increases in residential property values. Golberg provided information published by Dakota County, where median estimated market values have shot up to nearly 29% in some communities.
Average total taxes run the gamut from small reductions in Mendota and Lilydale to 16.27% in Eureka Township.
Steele County and local cities, townships, and school districts have approved preliminary levies and must finalize those by Dec. 28 each year. According to numbers posted by the Minnesota Department of Revenue, preliminary levies across the state increased 6% over 2022.
Local numbers include:
Steele County - 5.7%
City of Owatonna - 9.1%
City of Blooming Prairie - 11.8%
City of Medford - 6%
City of Ellendale - .5%
Owatonna Public Schools - 5.9%
Blooming Prairie Schools - 6.6%
Medford School - 5.8%
NRHEG Schools - 24.7%
The only townships reporting a change in their preliminary levy over 2022 are Berlin (12.5%), Blooming Prairie (1.2%), Havana (1.4%), Summit (1.7%), and Meriden (-2.1%).
Finalized budgets may lead to lower final levies, but officials can’t go higher than the preliminary levy.
Levies from jurisdictions in which a property is located, property valuation, Homestead Market Value Exclusion, property class evaluation changes, and new tax capacity all go into determining the final tax bill.
Golberg said the state offers some relief for homeowners with the Homestead Credit Refund, available to those with a household income less than $119,790. Also, a special property tax refund is not income-based and available to anyone whose taxes increased more than 12% and by more than $100 from the previous year.
Truth in Taxation hearings give the public a chance to weigh in before the final levy is set. Those happen on Dec. 6, 6 p.m., for the City of Owatonna; Dec. 12, 6 p.m., Owatonna Public Schools; Dec. 12, 7 p.m., Blooming Prairie Schools; Dec. 13, 6 p.m., for Steele County; Dec. 19, 7 p.m., City of Medford; and Dec. 19, 7 p.m., Medford Public Schools.