Tax Aids and Credits

Other Local Government Payments - Disaster Credits

Statewide Outcome(s):

Disaster Credits supports the following statewide outcome(s).

Strong and stable families and communities.

A thriving economy that encourages business growth and employment opportunities.

Context:

Damage caused by natural disasters and other events can lead to financial strain for households and businesses.

The disaster credit reduces the property tax of the homestead in the payable year following the damage suffered within a declared disaster or emergency area. The property is reassessed after the damage, and the difference between the original and reassessed value is multiplied by the prevailing local tax rate to obtain the credit amount. The state reimburses local governments for the credit. The credit program first became effective in 1984.

A county board may grant an abatement of net tax for taxes payable in the year in which the damage occurred if 50 percent of the homestead dwelling or other building was destroyed. The county may also grant a credit for taxes payable in the year following the destruction for homestead property that does not qualify for the disaster credit and non-homestead property. The state reimburses the local jurisdictions for abatements and credits for property located in a declared disaster or emergency area.

The state legislature periodically authorizes tax base replacement aid for cities that experience a tax base reduction greater than five percent due to damage caused by a natural disaster.

Funding Source: State General Fund.

Strategies:

Provide property tax relief for property damaged in a declared disaster or emergency area.

Results:

Property tax relief helps individuals, businesses and communities recover from the impacts of damage caused by a disaster.

Performance Measures Notes:

Average number of parcels receiving credits compares payable year 2009-2010 (previous) to 2011-2012 (current).

The amount of payment is dependent on the number and severity of disasters. In 2011, the June tornado in Wadena and September flooding in Southern Minnesota resulted in approximately 3,400 parcels receiving disaster credits.

For additional information, visit the Revenue Department (http://www.revenue.state.mn.us/Pages/default.aspx) website and search ‘disaster’.