UPDATE: Richfield Property Taxes to Rise in 2012

In approving the 2012 city budget at, the Richfield City Council approved a 3.98 percent increase in the city’s property tax rate. The increase was necessary to make up for an overall 2.5 percent spending increase in the approximately $19.5 million 2012 budget, which city staff members have been crafting since April of this year.

“It [the city budget] happens to be about the same service model from the previous year," said Richfield City Manager Steve Devich. "When we take a look at that we have a situation where we’re losing LGA and and we tried to keep the tax levy as low as we possibly could.”

Part of city officials’ long-term plans is to stop relying on local government aid (LGA) as a funding source in Richfield’s annual budget, as reported by 55423.com the tax rate increase came even as the council resolved to reduce allocated spending in the current year’s budget by $231,200.

Although difficult to predict what exact impact the rate increase will have on property tax bills due to fluctuations in the housing market, Devich said that, as a very rough estimate, a home valued at $175,000 at the beginning of 2012 would likely see a property tax increase of between $77 and $98. The $98 figure is based on a property’s value remaining flat between 2011 and 2012; a $175,000 property that declines two percent in value, which is the approximate average decline in the city, would see an estimated rise in its property tax bill of $77.

The increased tax rate approved by the city council is separate from a referendum, set to go before Richfield voters this November, which will effectively ask residents to approve an additional property tax levy. As part of a passed by the Richfield School Board in August, voters will be asked to approve an operating levy for district schools which would add $119 in property taxes to homes with an estimated market value of $185,800, the average residential property value in Richfield.

Much of the uncertainty surrounding a home’s final property tax bill is due to the property’s estimated market value (EMV), which a Hennepin County assessor estimates for both residential and commercial properties on a yearly basis.

Residents receive notice from the county assessor about their property’s estimated market value three times each year. Notice of a property’s EMV is given once on annual property tax notices, distributed in March, and again on annual valuation notices, distributed at the end of March or the beginning of April and notifying residents of their property’s EMV for the following year; residents receive their homes estimated market value again on their annual truth in taxation (TnT) notice, distributed in November.

Although city officials said their aim was to keep increases in the Richfield property tax rate as low as possible, Richfield Finance Manager Chris Regis said that circumstances in Minnesota really left the city no choice.

"We just don’t know what’s going to happen come next January, March and April,” Regis said, referencing persistent uncertainty over the state's willingness--and ability--to make aid payments to local government.

“We’re trying to go through this process [in order] to wean ourselves off LGA, and levying more in taxes is part of that, which is a challenge."

Residents interested in knowing more about how property taxes in Richfield work may access a series of explanatory videos prepared by City Manager Steve Devich on the Richfield city website.