Apple Valley's Tax Levy Decreases 3 Percent for 2012

While the total tax levy for the city of Apple Valley will decrease for 2012, many homeowners will pay a few dollars more in city property taxes.

The Apple Valley City Council on Thursday approved the city's 2012 budget and tax levy by a 4-1 vote. Councilwoman Ruth Grendahl did not vote in favor of the budget because she wanted a commitment to use fund reserves for road projects, she said.

Owners of a median-value Apple Valley home—$197,800—will pay $869 in city property taxes in 2012. For those whose homes decreased by the median 2.94 percent in value, that's $7 more than 2011.

Almost 92 percent of Apple Valley homeowners saw a home-value decrease of 2 percent or more; city finance Director Ron Hedberg said these people will see an increase of $17 or less in their 2012 city property taxes.

For the past two years, most Apple Valley residents . Residents still will pay less in city property taxes in 2012 than in 2009, Hedberg said.

The $22.03 million total tax levy remains unchanged from the preliminary levy the council adopted in September, and is about $675,000—or about 3 percent—less than the 2011 levy.

The levies for the general fund, street maintenance, property tax deliquencies and voter-approved debt service increased for 2012, the voter-approved debt levy by the most, $138,000.

Declining home values also impacted 2012 property taxes.

A major factor contributing to the 2012 total tax levy calculation comes from the state's switch from the former Market Value Homestead Credit program, a credit on homeowners' property tax bills, to the Homestead Market Value Exclusion program, which reduces the taxable market value of a home.

The exclusion program reduces the overall dollar amount of the city's tax base, Hedberg said. The maximum exclusion rate is 40 percent, for a house worth $76,000, and decreases as values go up, to 0 percent exclusion for a home valued at $414,000.

For the $197,800 median-value home, the taxable market value decreased $19,438 for 2012; residents saw the result of this calculation listed as their home's taxable market value on their November tax bills.

Hedberg said this created confusion, as some residents thought the value listed on their tax bills—the taxable market value after the exclusion was applied—actually was the value of their home, which is it not.

Eliminating the credit program does mean the city will not have to fund the more than $1 million in credits to homeowners that it funded before, because the state was not funding the entire amount of the homestead credit for Apple Valley, Hedberg said.

Apple Valley is better off than many cities in regards to the new exclusion program, Hedberg said. The city had been setting its levy higher to account for the fact that the city would have to fund the homestead credit on its own, while the cities for which the state was still funding the homestead credit will lose that aid now.

"I'm just happy that our increases are minor," councilman Tom Goodwin said.