Property Taxes

Property Tax Explainer: 10 Insights Into West St. Paul’s Property Taxes

Thanks to Blue Sky Bookkeeping for their support.

Proposed property tax statements recently hit West St. Paul mailboxes, prompting a round of bemused head scratching and fist shaking about what it really means. Property taxes are super complicated and many others have tried to explain it, but we’ll give it a shot as well. 

On average, West St. Paul residents saw an increase of 3.51%. But that’s just an average and will vary based on the factors we get into below. It’s worth noting that we’re just focusing on homeowners—commercial is another story. Commercial and industrial properties only saw an average increase of 0.58%

We sat down with West St. Paul’s finance director, Char Stark, to talk it out. Stark’s phone number and email are literally printed on every property tax statement in West St. Paul, so she’s the one with answers. 

Insight #1: Very Few Questions

Sample proposed tax statement
See a sample proposed tax statement

For all the head scratching and fist shaking, Stark says she gets very few calls or emails. As of our interview yesterday afternoon, she had only heard from one resident so far. 

“Normally I don’t get a whole lot,” Stark said. “When I first started, I think it was up to six or so. That was probably 2018 or 2019 when we were adding debt for Robert Street.” Back then the tax increases were in the 10% range. This year the city’s portion of the property taxes went up only 5.15% (not the 4.74% we reported in August—that was an error in the city’s numbers). That’s the lowest since 2016. 

Insight #2: Why Do Taxes Go Up?

When Stark does get questions, it’s usually folks asking why their taxes are going up so much.

“The answer is usually because you have a significant increase in the taxable market value of your home,” Stark says. The city’s tax increase certainly contributes, “but not like if you get a $20,000 or $30,000 increase in the taxable market value of your home. That is the biggest driver in what people are seeing.”

Insight #4: Bottom Line Is Not the Bottom Line

It’s easy to look at the bottom line number on the property tax form—the total amount you owe compared to last year, and specifically the increase as a percent—and think that’s how much the city is increasing your taxes. But that is not how property taxes work. 

That bottom line percent increase is going to be different for everyone.

As noted above, West St. Paul increased property taxes by 5.15%. But that bottom line percent change in your taxes will be different because it’s not just West St. Paul (see #6 below) and due to changes in the value of your home (see #5 below),

Why is that? Because property taxes are complicated. Let’s get into how they work.

Insight #5: How Property Taxes Work (i.e., Blame Your Neighbors)

So how do property taxes work? It’s complicated. 

Let’s oversimplify it: Property taxes are calculated by taking the estimated market value of everyone’s property divided by how much revenue is needed. There’s a lot more math involved and complications like fiscal disparity and TIF, but the short version is property taxes are all relative.

Your property value going up is certainly going to increase your tax bill, but it’s not that simple. It also depends on what happens to your value relative to all the other properties. 

In other words, if the value of your house went up more than your neighbors, you’re going to see an even bigger increase. That’s why that bottom line number is different for everyone. Some went up, some went up more than others, and some even went down.

Insight #6: It’s Not Just the City

West St. Paul is not entirely responsible for what you’re charged in property taxes. There are basically five different government entities taking a piece of your property tax pie:

  • Dakota County: No increase for 2022. 
  • West St. Paul: 5.15% increase for 2022.
  • ISD 197: This includes levies and bonds approved by voters from previous years as well as “other local levies.” Those other local levies are decreasing by about 5%.
  • Met Council: They fund Metro Transit, wastewater, and more. They approved a 2% increase for 2022.
  • Other Special Taxing Districts: This is a fun catchall for things like the Metropolitan Mosquito Control District, South Metro Fire, community/economic development authorities, watersheds, and more.

So your property taxes are a combination of all these districts. Some might go up and while others go down, and your bottom line number is a reflection of all of them.

Insight #7: What About the School Levy?

You might notice that under ISD 197 it notes that if your school district had a levy vote in November (we did), and it was approved (it was), then the final amount might be higher than what’s shown here as proposed. 

Wait, what? 

In short, the 2011 levy expired in 2021 and would not appear on your 2022 taxes unless approved by voters in November. These property tax forms don’t reflect those election results, and the levy was scheduled to expire, so that’s what the proposal shows. 

But the levy was approved, so it will be added back to your taxes in 2022. Let’s be clear—this is not a surprise increase. The proposed tax statement is showing what would have happened if the levy renewal had failed. So to see what your actual 2022 property taxes will be, add $52 for an average valued home ($300,500). 

If you still think you’re seeing a sneaky levy increase, go back to #2 above. If your market value went up, then your voter approved levy amount will be higher than it was in 2021 once the latest levy amount is added back in. Not because the levy went up, but because your home is worth more.

(To further complicate things, there’s also probably a small increase due to the inflation adjustment—but we’re talking a buck or two. Increasing home value is the real driving factor.)

Insight #8: No Public Meeting?!

Some people have noted that the property tax statement lists no public meeting for those “other special taxing districts” and cry foul. Isn’t everything supposed to be transparent? This is because state law does not require a truth in taxation meeting for these districts. But there is still transparency. All of these districts have public meetings where budgets and tax amounts have been approved.

You just don’t pay attention to the Metropolitan Mosquito Control District, do you? (Don’t worry, nobody does.)

For example, here are details about meetings of the South Metro Fire Board. They approved their levy in November, but they also presented it to West St. Paul and South St. Paul City Councils in August. South Metro added an increase for the first time in a while due to a change in state law that removed the cap on their levy. As we reported in August, they increased their total levy from $550,000 to $825,000 starting in 2022. That works out to $20 for a home with a tax value of $165,000.

Insight #9: These Are Proposed Numbers

Notice your tax statement says “Proposed Taxes” right at the top. These are not final numbers.  

All districts were required to approve a proposed levy number back in September. But the final number is not approved until later. The number approved in September is a maximum, meaning they can lower it but they can’t raise it.

The final tax rate is determined at a meeting before the end of the year so the public has a chance to weigh in. That’s why the meeting information is included on the tax statement. For example, West St. Paul will approve their final tax levy number at the December 13 meeting.

It’s possible city staff will find some more savings and be able to lower that 5.15% rate. That’s probably not happening this year, but it has happened in the past.

It’s also possible City Council will vote to lower the tax rate, especially if fist-shaking members of the public show up. That rarely ever happens. (Why not? The city council members saw the budget numbers all the way back in August and had a chance to weigh in. The tax rate is effectively their policy. While you might be upset about an increase in your taxes, the City Council has roads and parks and police to pay for.)

Insight #10: Help Paying

There are property tax refunds available through the state, but you need to apply for them. There are special refunds (if your taxes increased by more than 12%) and regular refunds (if your household income is less than $116,180). Talk to a tax expert for more on this.

There are also a number of state programs to help with property taxes for unique circumstances such as disability, disaster, farms, veterans, etc. There’s also a property tax deferral option for seniors.

Another way we get property tax relief is through the homestead exclusion. If you own your home and live in it, you should be getting this already—it’s deducted directly from your home’s estimated market value (if you’re not getting it, you can apply here). It’s a sliding scale based on the value of your home. The more your home is worth, the less you get. It’s capped around $413,000. So if your homestead exclusion went down this year, that’s because your home is worth more.

Finally, you can fight the power. As we’ve explained above, the biggest factor in how much you pay in property taxes is how much your property is worth. It’s all based on what Dakota County says your home is worth, and you can argue that. Watch for the valuation notice to come out in the spring with details on how and when to challenge your home’s estimated market value. 

Yep, Complicated

See? Told you property taxes are complicated. We’ve definitely oversimplified the explanation and it’s possible we’ve just gotten something wrong. So if you have further questions, talk to an expert. 

We linked to it above, but Dakota County does have a number of helpful resources and tools if you want to know more about property taxes. The tax estimator is a fun tool if you’d like to compare home values, years, or cities.

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One comment

  1. I am just commenting to re-emphasize the WSP Reader’s insight that you should look into the regular property tax refund. The regular property tax refund (Form M1PR) is VERY generous to homeowners in Minnesota. It’s a fairly obscure refund — as of several years ago, H&R Block’s tax software did not even know it existed — but YOU SHOULD GET IT if you own a home you live in.

    Talk to your tax preparer to confirm that you are getting it, or, if you file your own taxes (or use software), look up Form M1PR (very easy to find on Google) and fill it out yourself, carefully following the instructions.

    M1PR is a pain in the neck to apply for. The state requires you to include a bunch of stuff in your income calculation that it doesn’t make you include anywhere else, so you end up sitting on the floor trying to calculate the monetary value of specific employer benefits you don’t normally have to pay attention to. And the refund comes out in October/November (not in April/May like your regular state refund).

    But it can easily wipe out nearly half your property tax. I had total property taxes in 2021 of $3,730 (on a house valued at $290,200). M1PR got me a refund of $1,418.

    I don’t know how good the special refund program is, because I’ve never had to deal with it (God bless Dakota County’s great services and low administrative costs!), but I imagine it’s quite nice, too.

    Unfortunately, M1PR is much less generous to renters. I filled out M1PR for four or five years as a renter, and I think my biggest refund was like $25. M1PR for renters is really targeted at low-income renters, while M1PR for homeowners is targeted at both low and middle-class homeowners.

    Thanks to the Reader for sitting down and actually talking to Char Stark! It’s good to hear from her.

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