Now its St. Paul’s turn to get hit with higher property taxes

This is getting to be One Expensive Minnesota

Minneapolis…

This week, I’ve written about property tax hikes coming to Minneapolis. Sure enough, as the Star Tribune reports, on Wednesday Mayor Frey announced:

…a $1.88 billion budget and an 8.1% tax levy increase in 2025, followed by a 9.8% levy increase in 2026 to pay for ongoing operations, continued investments in housing and economic recovery, and looming obligations to personnel and police reform. These include a 30% raise for Public Works employees over three years and a 21.7% raise for police, as well as the costs of complying with the new Minnesota Department of Human Rights settlement agreement and bracing for an anticipated U.S. Department of Justice consent decree, both stemming from the murder of George Floyd.

…

As the city spends the last of its COVID-19 relief funds, next year will be the first year in several without the federal buoy. Earlier this year, officials revealed that the city faced a projected deficit of $21.6 million in 2025. That projected shortfall forced Frey’s administration to get creative to avoid making major cuts; the city is required to pass a balanced budget.

Budget staff looked to deflect the pain by making transfers to the General Fund from a fund for maintaining the downtown assets of the Convention Center, Target Center and Peavey Plaza, as well as borrowing more to pay for long-promised construction projects such as the $17 million South Minneapolis Community Safety Center to replace the burned-out Third Precinct police station. Still, the magnitude of the mayor’s proposed levy increase of more than 8% hasn’t been seen since the mid-2000s.

Of course, it might have been cheaper to not let a bunch of hooligans burn down the Third Precinct in the first place. Inaction, as well as action, has consequences.

…and St. Paul

The budget problems in Minneapolis stem from an increase in city government spending at a time when tanking commercial property values are dragging down commercial property tax revenues. The same dynamic is at work across the Mississippi in St. Paul. There, on Tuesday, the Star Tribune reports, Mayor Carter announced a:

…bump the city’s property tax levy to $224.9 million, a 7.9% increase from this year.

The levy is the total amount the city collects in property taxes. It is not automatically adjusted for inflation year to year, Carter noted, adding that about $19 million of the general fund’s $25 million increase is needed to maintain the city’s current service levels.

This is getting to be One Expensive Minnesota.

Some suggestions

As I wrote on Tuesday, there are no painless solutions to the budget problems faced by the Twin Cities. One element has to be cuts in city government spending.

In Minneapolis, the Star Tribune reports:

Other expenditures in the mayor’s proposed budget include affordable housing construction [and] $10 million to the Climate Legacy Initiative…

In St. Paul:

Carter gave the most airtime to what he’s calling his “all-in housing framework,” a $7.4 million package of spending proposals and policies aimed at addressing St. Paul’s housing crisis.

That includes $2 million for the city’s down payment assistance program. The mayor wants to expand St. Paul’s Inheritance Fund, which provides forgivable loans from that pool to descendants of Rondo neighborhood residents, to families displaced by the demolition of the West Side Flats in the 1960s.

Carter’s proposal also includes $1 million for the city’s homeowner rehab loan program, $1 million of support for the homeless and $1 million to waive fees for a pair of office-to-residential conversions.

…

New funds from an expanded Xcel Energy franchise fee would support $1.4 million in to address the impacts of climate change. Part of that would go toward efforts to change the city’s snow operations.

These programs should be first on the chopping block. There is certainly an issue with a lack of affordable housing in the Twin Cities, but that is because excessive taxes, fees, and regulations effectively make it illegal to build affordably here. I am not clear how hiking property taxes is going to make property ownership more affordable. Instead, government should be cutting these taxes, fees, and regulations. In addition, the notion that city leaders can have any impact on the global climate is absurd.

Ditching this wrongheaded and/or absurd spending doesn’t get you very far towards fixing these budget woes. But, as the Chinese philosopher Lao Tzu once said, “The journey of a thousand miles begins with a single step.”