Back To: Citizens Guide to St. Paul
Please use this web page to post information about St. Paul Tax Policy and links to useful resources.
TIF (Tax Increment Financing)
Tax increment financing (TIF) allows cities to create special districts and to make public improvements within those districts that will generate private-sector development. During the development period, the tax base is frozen at the predevelopment level. Property taxes continue to be paid, but taxes derived from increases in assessed values (the tax increment) resulting from new development either go into a special fund created to retire bonds issued to originate the development, or leverage future growth in the district." From - Tax Increment Financing TIF limits other taxing authorities (i.e. school districts) from benefiting from increased valuations.--Bleier 14:59, 13 Aug 2005 (PDT)
Taxes Vs. User Fees
User fees are often seen meerly as a means for politicians to generate revenue for the city, without increasing taxes. However, user fees have other advantages. For example, St. Paul has an unusually high amount of schools, churches, and government buildings which are tax exempt. However, the city can still charge them user fees as a means of covering some of the basic city services which these institutions take advantage of. One of the downsides of user fees is that the property owner cannot deduct them on their taxes. SPIF: User Fees as Taxes In Disguise Is there a list of St. Paul TIF projects on the web? It would be interesting to see how many there are, how much property value is not being taxed and how long those properties will remain at the lower tax rate.
How Property Taxes Work:
The issue of how a homes value relates to its property tax bill often comes up in the St. Paul Issues Forum. Most commonly, the question is asked about how increases or decreases in overall home values in the city, affect tax collection and city income. The short answer, is that the value of a particular home only has an effect on how much that homeowner pays in taxes relative to his or her neighbors. The overall, amount of property taxes collected stays the same, despite upturns or downturns in the real estate market.
Example: Assuming that property values increase 50% across the board in St. Paul - but the city budget remains the same. Then property tax rates (the percentage of a homes value) would actually decrease, while the total tax that each homeowner pays would remain constant. Of course, city budgets do not stay the same, so property owners are often see increases in their tax bill. BUT, those increases are related to increases in spending by the city and county, NOT as the result of upturns in the housing market.