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Glossary of TeYms <br />CATEGORICAL AID: Aid given to a local unit of government to <br />be used only for a specific purpose. <br />CIRCUIT BREAKER: See "Property Tax Refund:' <br />CLASS RATES: The percent of market value set by state law that <br />establishes the property's tax capacity subject to the property <br />tax. <br />COUNTYPROGRAM AID: State propertytax reliefaid to counties, <br />distributed with a formula based on needs (households on <br />foodstamps, age of the population, number of serious crimes) <br />and tax base equalization for counties with smaller tax bases. <br />EDUCATION AID: The total amount of state dollars paid for K <br />12 education. This aid is paid to the school districts. <br />FISCALDISPARITIES: Aprogram intheTwinCities metropolitan <br />area and on the iron range in which a portion ofthe commercial <br />and industrial property value of each city and township is <br />contributed to a tax base sharing pool. Each city and township <br />then receives a distribution of property value from the pool <br />based on market value and population in each city. <br />GENERALPURPOSEAID: Aidgiventounitsofgovernmenttobe <br />used at their own discretion. Examples are Local Government <br />Aid and County Program Aid. <br />HIGHWAY AID: Motor fuels tax and license tab money the <br />state distributes to counties, cities and townships for highways <br />and bridges. <br />HOMESTEAD: A residence occupied by the owner. <br />INDIVIDUAL INCOME TAX: A state tax on the income of <br />residents and non-residents with Minnesota sources of income <br />that is deposited into the state general fund. <br />LEVY: The imposition of a tax, associated with the property <br />tax. <br />LEVYLIMIT: Theamounta local unitofgovernmentispermitted <br />to levy for specific services under state law. <br />LIMITED MARKET VALUE: A state imposed limit on property <br />value increases. for the purpose of calculating property.taxes. <br />ASSOCIATION OF <br />Minnesota School <br />MINNESOTA COUNTIES <br />LOCAI GOVERNMENT AID (LGA): A state government revenue <br />sharing program for cities with low property wealth or high <br />service burdens that is intended to provide an alternative to <br />the property tax. <br />LOCALSALESTAX: A local tax, authorized bythe state, levied on <br />the sale of goods and services to be used for specific purposes <br />by the local government.. <br />LOCAL TAX RATE: The tax rate usually expressed as a <br />percentage of tax capacity, used to determine the property tax <br />due on a property, <br />MARKET VALUE: An assessor's estimate of what property <br />would be worth if it were sold. <br />MARKETVALUE AGRICULTURE CREDIT: A state credit to reduce <br />the property tax paid by agricultural homesteads to the local <br />taxing jurisdiction. <br />MARKET VALUE HOMESTEAD CREDIT: A state credit to reduce <br />the property tax paid by a residential homestead to the local <br />taxing jurisdiction. <br />PROPERTY TAX: A tax levied on any kind of property. <br />PROPERTYTAXREFUND: Apartial propertytax refund program <br />for those who have property taxes out of proportion with their <br />income. This program is available to homeowners and renters. <br />SALES RATIO STUDY: A study conducted by the <br />Department of Revenue of open market property sales, which <br />is then compared to local assessments to ensure that local <br />assessments adequately reFlect the market. <br />STATE GENERAL PROPERTY TAX: Astate-imposed property <br />tax on commercial, industrial, and seasonal recreational <br />properties. <br />STATE SALESTAX: A state tax (6.5%) levied on the sale ofgoods <br />and services that is deposited into the state general fund. <br />TAX CAPACITY: The valuation of property based on market <br />value and class rates, on which property taxes are determined. <br />November 2006 <br /> <br />Boards Association <br />~,eague o)<LHinnesota (,'ities <br />Cities promoting exceJ~ence <br />ASSOCIATION OF <br />L~--~-J V LtiJ <br />MINNESOTA COUNTIES <br />U <br />Minnesota Schaal $ Boards Association <br />MC <br />I,¢ague o~Minnesota Cih'es <br />Cihes promoh'ng exc¢iience <br />FouYteen Reasons <br />1~EHY PROPERTY TAXES VARY <br />FROM 1F~AR TO `EAR <br />THE MARKET VALUE OF A PROPERTY MAY CHANGE. <br />• Each parcel of property is assessed at least once every five years and a sales ratio study <br />" is done to determine. if the property is assess similarly to like properties. If not, the <br />Commissioner of Revenue may issue an 'order' that would affect the taxable value of a <br />parcel. <br />• Additions and improvement made to a property generally increases its market value. <br />THE MARKET VALUE OF OTHER PROPERTIES IN <br />YOUR TAXING DISTRICT MAY CHANGE, SHIFTING <br />" TAXES FROM ONE PROPERTY TO ANOTHER. <br />• If the market value of a property increases more or less than the average increase or <br />decrease in a taxing district, the taxes on that property will also change. <br />• New construction in a taxing district increases the tax base and will affect the district's tax <br />rate. <br />THE STATE GENERAL PROPERTY TAX MAY CHANGE. <br />• The state legislature directly applies a State General Property Tax tocommercial/industrial <br />~ and season/recreational property classes. <br />www.mncounties.orq wwuv.mnmsba.org www.lmnc.org <br />