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School referendum in Perham, Minn. affects property owners to different degrees

It's a question surrounded in confusion and controversy: If the Perham-Dent School District's proposed operating levy becomes reality, just who will end up paying for it?

While most people are aware that the levy would affect local taxpayers in one way or another, exactly who would pay and who wouldn't is not so clear-cut. Neither is how and why individual taxpayers may be affected differently.

A very basic way to explain school district operating levies is that they are funded by real estate property taxes. Individual property owners within the district are taxed an amount based on the market value of their properties.

This seems simple enough, but there are exceptions to who pays, and special rules for certain non-homesteaded properties -- and that's where some misconceptions and disagreement can come in.

Generally speaking, residential and commercial property owners pay the tax. Properties subject to school referendums include year-round family homes, business buildings and those classified as Nonhomestead Residential (such as secondary homes).

However, seasonal recreational properties (such as summer cabins) are not taxed. Neither is property classified as Managed Forest, Postsecondary Student Housing or Private Airport, among others (most of these do not pertain to the Perham-Dent district).

Agricultural properties are partially exempt from the tax; they are taxed based on the value of the house, garage and one acre of land, while the rest of the land and buildings are excluded. Commercial property is taxed on the value of the building, and not the business itself.

Some taxpayers view these exclusions and exceptions as unfair, especially in districts like Perham-Dent, where seasonal homes and agricultural properties make up a significant portion of the tax base.

Otter Tail County Auditor Wayne Stein said the total taxable market value of the Perham-Dent School District in 2011 (not including the small portion that lies outside the county) was more than $1.8 billion dollars. Of that, "less than half"- $8.7 mil-lion - was taxable for a school referendum.

"There are many tax codes in our county, and some are exempt and some aren't," said Bernie Steeve. "Anyone who owns property but doesn't live here permanently doesn't pay, and that's not fair. If 100 percent were taxed, it would be a small amount of money for everyone. But as it is, it hurts for those who have to pay. It's a large amount for them."

Steeve is a local resident who has spoken out against levy referendums in past years. This year, he's not saying whether he's for or against the referendum in Perham-Dent. He spoke to the Focus on behalf of himself and not any particular group.

The whole idea of property taxes as a means of school funding is one that needs reworking, said Steeves: "It's unfair how we assess people on market value. If you own a $300,000 home you pay more than if you own a $100,000 home, even if you don't have any kids in school. Property taxes do not work to fund government. I just don't understand why our legislators aren't looking at this and trying to equalize it."

The Perham-Dent levy would cost $105 per year for properties worth $100,000, with that amount progressively rising as the market values increase - up to $948 per year for a $900,000 property.

Levy referendums are a route many school districts in Minnesota are taking as they try to provide a high quality education for students in the face of inadequate state funding.

Voters in the Perham-Dent district will have the chance to decide whether or not to fund the levy in a referendum election this November. The district is seeking a total levy amount of $695 per pupil for four years.