When St. Paul Mayor Melvin Carter unveiled a budget proposal to increase the city’s property tax by 6.9 percent next year, he offered direct assistance to low-income homeowners to help them weather their property tax hike. promised too. St Paul’s City Council recently heard a presentation on the details, and several members expressed concern.
The mayor’s $600,000 fund is designed to offer $500 a year to homeowners in high-poverty areas who are spending more than 30 percent of their income on housing.
The property must be classified as a princely state, meaning it is in the possession of the owner and is considered the owner’s primary residence.
St Paul’s City Council member Jane Prince said after the November 17 presentation to administration officials: “We can serve about a quarter of the people who may qualify for it, so immediately we’ll have winners and losers.” ” “Then they get it, and it’s taxable. … It’s such a modest gain that it doesn’t make sense to me.”
Council President Amy Brendmoen said that as the daughter of a single mother, she spent years in public housing before her family moved to her estate, and that she experienced these issues at first growing up, but at the time of the mayor. The initiative was “not ready for prime-time.”
“Let’s get people to sign up for existing programs, as opposed to setting up another program we’ll have to walk out the door for,” Brendmon said.
Homeowners earning less than 130 percent of the poverty level
The mayor’s low-income homeowner assistance program will be targeted to homeowners who earn no more than 130 percent of the federal poverty level or 30 percent of the area’s median income. The latter adds up to an income limit of $31,450 for a family of four.
About 20 percent of St. Paul’s homeowners qualify as burdened with housing costs, meaning they spend more than 30 percent of their income on housing, and 6 percent of St. Paul’s homeowners are severely burdened. Qualify as, which means they spend more than 50 percent of their time. income on housing.
About 4,000 homeowners would fit into those categories, although the fund would cover about 1,000 applicants.
“Since we cannot tax people at different rates, we see this program as a way to capture market value and maintain the services of the city, while also making those cost-burdened properties flexible. provide support, especially in areas of concentrated poverty,” said Madeline Mitchell, a senior budget analyst in the Office of Financial Services, addressing the council. “The payment is not an estate tax refund, but flexible financing. … It’s not a loan.”
$25 million in unclaimed refunds by Ramsey County landlords
Casey Widrick, financial capacity manager at the city’s Office of Financial Empowerment, said the program will also link homeowners to other existing benefits they may qualify for, such as energy assistance and tax deferral for low-income senior citizens. Those who have lived in their home for at least 15 years.
Between homestead credits, renter’s refunds, and special homestead credit refunds in higher tax years, Ramsey County residents are leaving nearly $25 million unclaimed each year.
Homeowners who declare a home as their primary residence can receive an annual property tax credit of up to $2,840 from the state of Minnesota, as long as their household income is less than $116,180. Information on how to register is online at tinyurl.com/HomesteadMN.
Another commonly overlooked benefit is a special homestead credit that the state offers to anyone whose property tax exceeds 12 percent in one year, regardless of household income. Although it’s smaller than a traditional homestead credit, special refunds typically run between $81 and $162.
Brendmon, citing county statistics, said that a third of Ramsey County property owners are not applying for their homestead refunds, which average $1,100.
“Which of Ramsey County’s eligible third isn’t applying?” Brandmon said. “It’s probably in St. Paul’s, and maybe it’s in the areas I represent.”
Council member Rebecca Noecker stressed that linking taxpayers to existing refunds could go beyond creating a new program for the administration.
“I’m just wondering if this is the best use of employees’ time and resources,” she said. “There are millions of dollars at the state and county level that go unused every year. That seems like a better strategy to help people access those dollars, not to create a new pool of money that They may or may not apply. The irony of raising taxes to reduce taxes is something to think about.”
Financial Services Director John McCarthy said each refund has its limits.
For example, special refunds are available in a year where property taxes climb 12 percent or more, but are not offered again to the same homeowner in the following year unless their property tax increases by 12 percent. Prince acknowledged that the paperwork involved was confusing.
Council members Friend Jalali and Nelsey Yang spoke passionately in favor of the mayor’s low-income homeowners assistance program, noting that it could find a niche. “Ever since we first talked about that office, I had envisioned the Office of Financial Empowerment,” Jalali said.
Yang said eligibility for the program should be expanded outside the city’s areas of concentrated poverty. “When I’m talking to people on the East Side here, the most common issue that comes up is how burdened people are with property taxes,” Yang said. “I think it’s actually a very good move … while also finding ways to connect them to the other resources available.”
Wiedrich added, “We think we need to do a significant amount of outreach to raise awareness.”
The hike in property tax is expected to hit the low-income sectors the most
The property tax increase next year is expected to impact the city’s lowest-income neighborhoods, given that Frogtown, Dayton Bluff, Payne-Phallen and North End have increased the average property for single-family homes since 2017. The biggest increase in prices has been observed.
In Frogtown, a single-family home with an estimated market value of $111,000 in 2017 will be worth $173,000 this year, according to Ramsey County. This is an increase of 56 per cent, the highest price jump in the city.
St Paul’s City Council will host a “truth-in-taxation” public hearing on the proposed 2022 budget and tax levy at 6 p.m. on 1 December, followed by a final vote on the budget and tax levy on 8 December.