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Experts say federal changes are behind proposed tax hikes
Property taxes are expected to increase in Minnesota next year due to federal changes. FOX 9's Soyoung Kim has more.
(FOX 9) - Local governments across Minnesota are facing budget challenges for a variety of reasons.
Groups representing local governments said an added pressure to planning for 2026 and beyond is the impact of federal changes that will have a trickle-down effect.
Impact of significant changes
By the numbers:
The Minnesota Department of Revenue released preliminary data that shows property tax levies statewide could rise by a total of nearly $1 billion.
Many cities and counties across the state are proposing property tax levy increases for 2026.
"We’re seeing increases across the state higher than most years," said Pierre Willette, senior intergovernmental relations representative of the League of Minnesota Cities.
"The sheer financial impact on counties is something we have not seen in recent history," said Matt Hilgart, government relations deputy director of the Association of Minnesota Counties.
Trickle-down effect
What they're saying:
Government relations teams with the League of Minnesota Cities and the Association of Minnesota Counties said there are some similarities across taxing authorities for the reasons behind the need for levy hikes.
"Cost of labor, materials, insurance, all going up. Just like your budget for your family, everybody’s costs are going up," said Willette.
"There are a lot of pressures on local government and the inflation factor for the things that they do and the services that we expect from them. EMT services across the state, those are normally reimbursement through federal dollars, some of that has been cut."
While county officials said they are facing challenges unique to being the administrator of social safety net benefits, which include addressing a decrease in reimbursements and funding.
"A tremendous amount of change for our county operations surrounding the administration of SNAP benefits and Medicaid. Those effects are having downward effects on our budgets and levies. Reduction of the administrative reimbursement that we get for administering a federal program," said Hilgart.
"These services aren’t something we can say hey, you are no longer footing the bill, we’re stepping away from doing this. No, this is the SNAP benefit, we have to administer this. This is a mandate from the federal government. Having to consider adding more staff to deal with the mandates of new workload requirements from the federal government. And system inefficiencies that means that we have to hire more people just to do the tasks because they take longer than they should."
Local perspective:
Local government officials said some of that burden does end up hitting the property tax system in the form of levies, but what property owners will end up seeing in their final tax bill is based on a combination of factors.
"Property tax system is very complex. There might be tax base growth in your community where you actually have the same property tax bill or reduced because your classification could have changed, your home’s value might have dropped, new homes might have been added in your community or new businesses that are sharing more of the burden," said Hilgart.
"Raising property taxes is not the only thing cities try to do. They might make decisions to forgo maintenance or to not do a project this year, or maybe reduce services or look for partnerships with other cities to do things together to save money," said Willette.
What's next:
Truth-in-taxation meetings are the next step before local governments set final levies by Dec. 29. Check with your local taxing authorities for more information.
Learn more about the list of 2026 preliminary property tax levies here.