Freeborn County residents can anticipate an increase in property taxes from all-around during 2012 — even if local governments freeze their spending.

That’s because the state, in part of its attempt to recover its budget deficit, has eliminated the homestead market value credit, which totaled about $292 million in credits statewide, said Freeborn County officials on Wednesday.

An issue not widely talked about since the state Legislature’s July special session, the credits equaled out to about $2.4 million for all of Freeborn County, including the county, townships, city of Albert Lea and the school districts.

Though local leaders are still wrapping their heads around what exactly the elimination of the credits will mean, rough estimates are that nonhomestead properties valued at $100,000 and commercial properties valued at $200,000 could see automatic increases of 6 percent in their county tax alone if there is no change in the county’s levy, according to Freeborn County Administrator John Kluever. Ag land could see an 11 percent increase in county taxes.

Any raise in the levy that the county passes would be a tax increase on top of that percentage.

The only way Freeborn County residents would not see an increase in taxes is if levies are reduced by certain amounts.

It will be a similar case for cities and school districts.

Albert Lea City Manager Chad Adams said even if the city freezes its property tax levy, there could be some double-digit increases in property taxes to non homestead properties, commercial and industrial properties, and higher-valued homestead properties.

Adams said some of the lower valued properties in the community — under $76,000 — could see a city tax decrease as a result of the changes.

Freeborn County Auditor-Treasurer Dennis Distad said smaller communities in the state will be hit harder from the change, and while non-homestead, commercial and ag property will feel many of the effects from the shift, homestead properties won’t likely be getting away unscathed either.

Under the homestead tax credit, homeowners claiming homestead on their tax statements received credits reducing their gross tax. The state reimbursed local governments for a portion of the market value credits granted to individual taxpayers on tax statements.

Now, to cushion the blow of the elimination of the credits to homeowners, the state instituted a homestead market value exclusion, under which about 40 percent of the first $76,000 in market value of a home will be excluded when figuring out taxes, said Freeborn County Assessor Ryan Rasmusson. The exclusion is reduced by 9 percent of the market value over $76,000 until it hits zero exclusion at $413,800 of the market value.

This will in effect also reduce tax capacity.

The change will, however, take away any question about whether the state will reimburse all the money it promised because there will no longer be a payment to cut.

Local governments will receive the full amount they levy from their taxpayers.

Distad said though many questions still remain, final figures will be able to be calculated toward the end of September when new programming from the state is distributed to local governments.

The county has to set its preliminary budget levy by Sept. 15.