Your fair share of property taxes; no more no less

The local services we depend on every day are paid for in large part by property taxes. How is your share determined? The county assessor estimates the market value or what the property may sell for in today’s market for each taxable property. Then it is assigned a class according to its use. Minnesota has the distinction of having over 60 classes of property, by far the most in the country. The estimated market value of each property is multiplied by the tax capacity percentage for its class resulting in the tax capacity.

   The assessor’s office is required by the state to maintain a median sale ratio between 90% and 105% where there are six or more sales. Fillmore County Assessor Jason McCaslin says he shoots for 95%. Due to the demand for housing and high prices for homes over the last year in many jurisdictions, this median sale ratio will have to be adjusted. However, just because valuations are increased, it doesn’t necessarily mean one’s property taxes will go up proportionally. If a jurisdiction is out of compliance, the State Board of Equalization will order changes to bring that jurisdiction into compliance.

The taxing districts including school districts, cities, townships, and the county all estimate a budget to provide services for the coming year. They determine the funds they will require to operate. The assessor’s office values property and calculates tax capacity. The county auditor calculates the amount of each property owner’s tax based upon the final levy amounts (divides the levy by the tax capacity to develop a tax rate). If valuations of properties go up all over a jurisdiction, the amount of property tax for an individual property may only increase proportional to the increase in the levy.

If the total amount of tax to be collected does not change, but one classification of property, for example commercial, is out of compliance so commercial valuations are increased to bring them into compliance, taxes on other classifications will decrease even though the value on those properties remain the same. The assessor’s job is to “ensure each property is liable for their fair share of the property tax burden according to Minnesota Statute.” No more and no less.

McCaslin has been the assessor in Fillmore County since late spring 2020. An interim assessor, contracted from Winona County for his services, reported shortly before McCaslin was hired that Fillmore County was 30-40% compliant with the state law requiring every property to be looked at every five years. McCaslin served as the assessor for Jackson County before being hired by Fillmore County. He said it took 3-4 years to resolve issues in that county. He noted that the lack of equity in valuations across the county has since been recognized.

An owner of a half-acre buildable lot in Preston had contacted the Fillmore County Journal about an 1,100% increase in his property taxes year over year. The lot had been purchased some time ago and was valued prior to the arrival of the interim assessor at $2,600. It is now valued at $35,000. The large increase seems to be the result of a significant undervaluation. This is an example of what has been in some cases a lack of equity in valuations. This large valuation increase is a one-time significant increase to bring the valuation in line.

McCaslin expects there will be a number of appeals this spring as significant changes are being made. McCaslin and the four appraisers who work with him are working on a reassessment of the county. All of the appraisers were new hires in 2021. He is willing to talk to taxpayers; he wants an open line of communication. “People fear most what they don’t understand.” McCaslin is working to identify those jurisdictions that are most out of compliance, to reassess them first.

The tax capacity is expected to increase dramatically in the county this year, as market values are increasing county wide. The value of agricultural land is also increasing.

Contesting your valuation

If a property owner wants to contest his/her valuation, visit your local assessor’s office to discuss the valuation. If one decides to appeal, appeal to the township or board of review in April or May in person or by letter. If still not satisfied, appeal to the county Board of Equalization in person or by letter. The Board of Appeal and Equalization will be on June 14 in Fillmore County. One can go further and appeal to the State Board of Equalization or Minnesota Tax Court.