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MEMO TO: MAYOR AND CITY COUNCIL <br />FROM: CLERK-AD14INISTRATOR PAULEY/FINANCE DIRECTOR BRAGER <br />DATE: JUNE 29, 1988 <br />SUBJECT: 1988 PROPERTY TAX LAW <br />h an old dog new tricks.", comes to <br />The old saying, You can t tear <br />mind when reading the 1988 Property Tax Laws and trying to <br />develop an understanding of the new <br />sYand mformulas . These new laws and requiresow <br />out almost all of the old terminology <br />that one learn a whole new language before developing a <br />comprehension of the system. <br />The purpose of this memo is to summarize the law, not to provide <br />you with a complete analysis of its impact on Mounds View <br />property taxes. That analysis can only be done by the State or <br />Ramsey County and ill likely not be available in the near <br />w <br />future. We will, however, be able to give you our best opinion <br />as to the ess of the <br />e Beffects <br />impact onthe <br />property taxeslevy <br />authority and an <br />educate gu <br />As the law deals with four basic areas affecting <br />ourtaxeslhomestead <br />authority and property taxes, namely, property <br />credit, local government aid, and levy limits, we will divide <br />this memo up into these four sections and an analysis of the <br />anticipated impacts on Mounds View. <br />Property Taxes <br />The 1988 omnibus Tax Law retained the property classifications <br />and their tiers set up in 1987, but replaced the classification <br />ratios for them with a new set of tax capacity percentages. <br />Under the old system (ore 1989), the estimated market value of a <br />piece of property was multiplied by the ratio set up £or <br />property's classification. Under the new system, the estimated <br />market value of a piece of property is to be multiplied by a "tax <br />established for the property's class. <br />capacity percentage" <br />Exhibit A illustrates the difference between the old and new for <br />some classes of properties. Exhibit B illustrates the method for <br />computing taxes under the old and new systems. <br />One set of "gross tax capacity percentages" is to be used for <br />taxes payable in 1989 while the homestead credit is still in <br />effect. Another set of "net tax capacity percentages" is to be <br />used beginning with taxes payable in 1990 when the homestead <br />credit is dropped. <br />Determining the amount of property tax on a piece of property is <br />not that simple, liedvagainstca parcel'sgross <br />marketnet <br />valuecthecity <br />"gross <br />percentage is app <br />or net tax capacity" is determined. The "tax capacity rate" or <br />a taxing jurisdiction is then determined by dividing the <br />jursidiction's levy after adjustment for aids by the total gross <br />