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The Fiscal Disparities Program: Commercial - Industrial Tax Base Sharing - House Research Page 2 of 2 Calculating the property tax for each commercial - industrial property. The property tax statement for each 0/1 property has a local portion and an areawide portion, based on the relative amount of the tax base that is contributed (areawide portion) versus the relative amount that is retained (local portion) for the municipality where the property is located. How has the In the first year of implementation (1975), the areawide tax base included 6.7 percent of metropolitan area the total metro C/1 tax base and 2.1 percent of the total metro tax base. For 2004, the program grown? areawide tax base was 32.3 percent of the total metro 0/1 base and 9.8 percent of the total metro tax base. How much do fiscal A House Research study based on taxes payable in 2004 found that the average disparities affect tax homestead tax in St. Paul, which is one of the largest net beneficiaries of the program, burdens? was 8.8 percent lower because of fiscal disparities. The study also found that the average homestead tax in Bloomington, which is one of the largest net contributors, was 5.5 percent higher. Homestead effects throughout the area generally varied between these extremes. For commercial - industrial properties, average taxes were 2.7 percent lower in St. Paul due to fiscal disparities and 9.7 percent higher in Plymouth, another suburban city that is a large net contributor. Commercial - industrial properties elsewhere in the metro area fall in line between these extremes. The study looked only at the direct effect of fiscal disparities, i.e., the redistribution of tax base, and made no attempt to factor in alternative development patterns that might have occurred without fiscal disparities. How did the 2001 The elimination of the general education levy, imposition of a state property tax levy, and property tax reform reduction in commercial - industrial class rates caused the nominal amount of money affect fiscal redistributed by the fiscal disparities program to decrease. However, based on the disparities? aforementioned House Research study, the net effect of fiscal disparities on tax burdens is similar to what it was before the reform. What about the Iron Tax effects of the Iron Range fiscal disparities program are much smaller in magnitude Range program? since the percentage of tax base being contributed is so low due to the relative infancy of the program. For more information: Contact legislative analyst Steve Hinze at 651- 296 -8956 or Karen Baker at 651- 296 -8959. Also see the House Research publication Minnesota's Fiscal Disparities Programs: Twin Cities Area and Iron Range. January 2005 Return to Property Tax Return to House Research home Updated on http: / /www.house.leg. state .mn.us /hrd/pubs /ss /ssfisdis.htm 12/13/2011