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Glossary o~'Te~°yns CATEGORICAL AID: Aid given to a local unit of government to be used only for a specific purpose. CIRCUIT BREAKER: See "Property Tax Refund " CLASS RATES: The percent of market value set by state law that establishes the property's tax capacity subject to the property tax. COUNTYPROGRAMAID:State properrytax reliefaid tocounties, distributed with a formula based on needs (households on foodstamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases. EDUCATION AID: The total amount of state dollars paid for K- 12education. This aid is paid to the school districts. FISCAL DISPARITIES: A program in theTwin Cities metropolitan area and on the iron range in which a portion of the commercial and industrial property value of each city and township is contributed to a tax base sharing pool. Each city and township then receives a distribution of property value from the pool based on market value and population in each city. GENERALPURPOSEAID: Aidgiventounitsofgovernmenttobe used at their own discretion. Examples are Local Government Aid and County Program Aid. HIGHWAY AID: Motor fuels tax and license tab money the state distributes to counties, cities and townships for highways and bridges. HOMESTEAD: A residence occupied by the owner. INDIVIDUAL INCOME TAX: A state tax on the income of residents and non-residents with Minnesota sources of income that is deposited into the state general fund. LEVY: The imposition of a tax, associated with the property tax, LEVYLIMIT: The amounta local unitofgovernment is permitted toievy for specific services under state law. LIMITED MARKET VALUE: A state imposed limit on property value increases far the purpose of calculating property taxes. LOCAL GOVERNMENTAID [LGA): A state government revenue sharing program for cities with low property wealth or high service burdens that is intended to provide an alternative to the property tax. LOCAL SALESTAX: A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government. LOCAL TAX RATE: The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property. MARKET VALUE: An assessor's estimate of what property would be worth if it were sold. MARKET VALUEAGRICULTURE CREDIT: A state credit to reduce the property tax paid by agrictaltural homesteads to the local taxing jurisdiction. MARKET VALUE HOMESTEAD CREDIT: A state credit to reduce the property tax paid by a residential homestead to the local taxingjurisdiction, PROPERTY TAX: A tax levied on any kind of property. PROPERTYTAXREFUND: Apartial propertytaxrefundprogram for those who have property taxes out of proportion with their income. This program is available to homeowners and renters. SALES RATIO STUDY: A study conducted by the Department of Revenue of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market. STATE GENERAL PROPERTY TAX: Astate-imposed property tax on commercial, industrial, and seasonal recreational properties. STATE SALES TAX:. A state tax (6.5°k) levied on the sale of goods and services that is deposited into the state general fund. TAX CAPACITY: The valuation of property based on market value and class rates, on which property taxes are determined. November 2006 ASSOCIATLON OF Minnesota School M NNESOTA COUNTIES T boards Association ASSOCIATION OF ~~ _ __ ~ _ _ . .Minnesota School ~ Boards Association ~~ MINNESOTA COUNTIES ~ ~; ~e~hf~,~~t~e ~ s FouYteen Reasons 1~-1 1 : 'fin ~.,i~ WHY PROPERTY TAXES GARY FROM YEAR TO YEAR THE MARKET VALUE OF A PROPERTY MAY CHANGE. • Each parcel of property is assessed at least once every five years and a sales ratio study is done to determine. if the property is assess similarly to like properties. If not, the Commissioner of Revenue may issue an 'order' that would affect the taxable value of a parcel • Additions and improvement made to a property generally increases its market value. ~~Y~ T ET T PETIES.I ,~x YOUR TAXING DISTRICT MAY .CHANGE, SHIFTING TAXES FROM ONE PROPERTY T4 ANOTHER. ~eague of l~innesofa ~`itie5 ~'ifie5 promoting exce~ence • If the market value of a property increases more or less than the average increase or decrease in a taxing district, the taxes on that property will also change. • New construction in a taxing district increases the tax base and will affect the district's tax .rate. THE STATE GENERAL PROPERTY TAX MAY CHANGE. • The state legislature directly applies a State General PropertyTaxtocommercial/industrial and season/recreational property classes. www.mncvunties.orq www.mnmsba.org www.lmnc.org