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PoliGraph: Dayton property tax claims add up

Accurate image.GIFNot a gubernatorial debate goes by without some discussion of government aid to cities and schools.
DFL hopeful Mark Dayton raised the issue during a debate at the University of Minnesota on Oct. 15, 2010, saying state aid cuts are forcing property taxes up.

"For every dollar you cut in local government aids or in school aid from the state, property taxes go up by 67 cents," he said. "That's why property taxes in Minnesota under Gov. Pawlenty have gone from $4 billion to $7 billion."

Dayton's correct that the correlation between cuts in government aid and increasing property taxes is strong. However, it's worth pointing out that there are other reasons school and local property taxes are on the rise.

The Evidence

First, Dayton says that property taxes increase by 67 cents for every dollar the state cuts in aid.

Generally speaking, this is true, though it's important to note that this is a rule of thumb employed by the Minnesota Department of Revenue when estimating how cuts in state aid will interfere with tax revenue, not the law of the land. Eric Willette, who directs property tax research at the revenue department, says recent estimates have been on the high end because many cities are choosing not to raise property taxes in light of the ongoing recession.

The same trend is evident when it comes to per pupil school aid. Based on Department of Education data, when accounting for inflation, per pupil funding has declined by about $1,300 since 2003, and property taxes have increased by about $870 - a two-thirds increase in taxes.

Further, Dayton points out property taxes have increased from $4 billion to $7 billion in recent years. This is also true. Since Pawlenty took office in 2003, local and school property taxes have increased by about that much. (State property taxes have increased over the years, but not dramatically.)

Dayton's underlying point, that a rise in property taxes is the direct result of cuts to state aid, is fuzzier.

By all accounts, the cuts are a major contributor. However, there are other factors at play.

In counties, for instance, property taxes have been on the rise because the state has shifted some of the costs associated with taking care of the Medicaid patients and the mentally disabled to counties, says Keith Carlson, executive director of the Minnesota Inter-County Association.

Meanwhile, cities and towns are grappling with higher health care costs, home foreclosures that erode the tax base, and relatively high energy costs meaning it costs more for police and fire departments to fuel their patrol cars and fire trucks.

The Verdict

Generally, Dayton's claims are correct. It's true that for every dollar that's cut in state aid, property taxes tend to increase by about 67 cents. And these cuts have driven increases in property taxes.

That said, it's important to put this trend in context: The recession, foreclosures, and higher gas prices have all contributed to this increase as well.

All in all, Dayton's claim passes the PoliGraph test.


The UpTake, Gubernatorial Debate at the University of Minnesota, Oct. 15, 2010

Minnesota Department of Revenue, Price of Government: State and Local Government Revenues are Forecast Through 2013, accessed Oct. 19, 2010

State of Minnesota: Office of the State Auditor, Minnesota City Finances, 2008 Revenues, Expenditures, and Debt, Dec. 31, 2008

Minnesota2020, When It Comes to School Finances, No News is Not Good News, by Jeff Van Wychen, Aug. 23, 2010

Interview, Eric Willette, Property Tax Research Director, Minnesota Department of Revenue, Oct. 19, 2010

Interview, Keith Carlson, Executive Director, Minnesota Inter-County Association, Oct. 19, 2010

Interview, Gary Carlson, Director of Intergovernmental Relations, League of Minnesota Cities Oct. 19, 2010

Interview, Jeff Van Wychen, Minnesota2020, Oct. 20, 2010

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