Mark Haverman, Executive Director of the Minnesota Center For Fiscal Excellence, discusses the annual 50-State Property Tax Comparison Study, done in partnership with the Lincoln Institute of Land Policy

1. 1/12/2012
Property Tax Burdens of U.S. Cities:
How They Rank and What to Know About the Rankings?
Mark Haveman, Executive Director
Minnesota Center for Fiscal Excellence
Economic Perspectives on State and Local Taxes
Lincoln Institute of Land Policy
December 4, 2015

2. 1/12/2012
The 50-State Property Tax Comparison Study
• “Payable 2014” is our 14th edition,
3rd in partnership with the Lincoln
Institute
• Compares effective property tax
rates for commercial, industrial,
residential, and apartment properties
in the largest city of each state (and
DC) and a rural area in each state
• “Payable 2015” will be completed
in April, 2016

3. 1/12/2012
What Does This Study Do?
• Answers the question: “Who imposes the highest property tax burdens
relative to property value?”
• Effective tax rate = tax burden / market value
• By holding market values constant, we control for different real estate
conditions
• This isolates the influence and impact the design of a state’s property tax
system has on effective tax rates and enables cross state comparisons
• Provides a measure of the “structural competitiveness” of the state’s
property tax system

4. 1/12/2012
Key Features – What Makes It Unique?
• Parcel and property class focused (rather than based on aggregate
property tax collections)
• Includes business property
• “Bottom up” approach models all major property tax system components
• Additional features provide insights and answers to some other common
property tax questions:
“What is the impact of assessment limitations on homestead
tax burdens and state rankings?”
“How much property tax subsidy do business properties provide to
homeowners and how does that compare to other states?”
“How do the property tax burdens for the median homeowner
compare across the country?”

5. 1/12/2012
How Do We Compute the Net Tax on a Property?
Net Property Tax = ((TMV x SR) – EX) x CR x TR – C
Where
TMV = property value in an arms-length transaction
SR = sales ratio
EX = exempted value
CR = classification rate (portion of a property’s value subject to
taxation based on property type)
TR = total local property tax rate
C = credits or refunds (offered to majority of property owners)

6. 1/12/2012
Study Limitations
• Only looking at one piece of a larger tax regime
• Still location specific -- largest city and rural city burdens may not reflect
general “state reality”
• Tax burden comparisons for business properties must be done with
significant care
• $1 million of business property in Fargo is qualitatively different than $1
million of business property in New York City
• Similarly time trend comparisons are difficult (parcels don’t maintain
their value over time)
• Circuit breakers not included

7. 1/12/2012
A Look at the Northeast
Rank Amount Rank Amount
Bridgeport, CT 1 4.040% 2 $6,601
Portland, ME 13 1.913% 9 $4,400
Boston, MA 48 0.708% 20 $2,702
Manchester, NH 6 1.264% 8 $5,035
Providence, RI 18 1.707% 16 $2,933
Burlington, VT 7 2.342% 3 $6,415
Median-ValuedHome Results forTaxes Payable 2014forUrbanAreas (of 53)
Effective Tax Rate NetTax
City, State

8. 1/12/2012
A Look at the Northeast
City, State Rank ETR Rank ETR Rank ETR
Bridgeport, CT 7 3.415% 17 1.901% 5 3.481%
Portland, ME 29 2.000% 41 1.100% 21 2.000%
Boston, MA 13 2.884% 23 1.590% 40 1.263%
Manchester, NH 28 2.031% 37 1.218% 17 2.321%
Providence, RI 4 3.646% 16 1.909% 8 2.960%
Burlington, VT 23 2.314% 25 1.551% 15 2.364%
Business PropertyResults forTaxes Payable 2014forUrbanAreas (of 53)
Commercial, $1million Industrial, $1million Apartment

9. 1/12/2012
A Look at the Northeast – Rural Areas
City, State
Home,
$150,000
Commercial,
$1million
Industrial,
$1million
Apartment
Litchfield, CT 12 25 34 24
Rockland, ME 14 17 26 16
Adams, MA 13 10 20 17
Lancaster, NH 3 18 22 8
Hopkinton, RI 15 22 29 20
Hartford, VT 5 21 25 13
Rankings forTaxes Payable 2014forRural Areas (of 50)

10. 1/12/2012
A Look at the Northeast – Classification Ratio
• Compares the effective tax rate on $1 million commercial property (real
property only) to effective tax rate on median-valued homestead
• A measure of how much businesses subsidize homeowner taxes
• Ratio < 1 = Commercial properties are under assessed relative to homes
City, State Ratio Rank(of 53)
Bridgeport, CT 0.868 52
Portland, ME 1.045 39
Boston, MA 4.009 2
Manchester, NH 1.000 tied 43
Providence, RI 1.909 18
Burlington, VT 1.104 34
U.S.Average 1.710

11. 1/12/2012
QUESTIONS?
www.FiscalExcellence.org