This year’s budget is the most difficult I have experienced since taking office. One concern I’ve heard is the increase in proposed property taxes for 2011. Many, if not all, property owners have seen increases over 2010. The typical increase is between 15 and 18 percent. Several factors play roles in this year’s increase in property taxes, including a decline in the overall tax base; a shift in the burden of property taxes from commercial and industrial properties onto residential properties; increased obligations to closed pension funds; decreases in Local Government Aid; and the recertification of Tax Increment Financing Districts. Please see my blog for more of my thoughts on the proposed levy and budget.
Earlier this week the Ways and Means Committee approved a set of amendments which would cut an additional $6.1 million from the proposed 2011 budget. The cuts would lower the City’s property-tax levy increase from the 7.5 percent reflected in the notices to 4.7 percent. Unfortunately, at a 4.7 percent levy increase, the typical Minneapolis property-tax bill for a $196,000 home will be only $42 smaller than it would have been under the 7.5 percent levy increase that homeowners saw reflected in their Truth in Taxation statements.
The $6.1 million includes: a $1 million reduction to our self-insurance fund; a $1.1 million reduction in Target Center maintenance and upgrades; a $1.4 million dollar reduction to the Minneapolis Public Housing Authority; a $2 million reduction in the Minneapolis Park and Recreation Board budget; a $400,000 reduction to the Mayor’s proposed Pension Management Plan; and a $250,000 reduction in funding for maintenance and improvements of City Hall building. Looking into future years, there is also a proposal that would put a freeze on wages for two years. Because of the 23 collective bargaining units and the timing of their contracts, this would be phased in over three years.
Additional information on NRP/Property tax decisions
OPINION | RT’s tax policy making me a three-time loser by Justin Eibenholzl
The University of Minnesota’s Center for Urban and Regional Affairs (CURA) has prepared a series of maps showing the impact of NRP. Click below for PDF maps:
I am supportive of many, if not all, of these ideas, but am gathering information and welcome comments and concerns as I determine how I will vote.
One idea, however, I oppose. This involves dramatic changes to the Neighborhood Revitalization Program (NRP) and includes directing staff to not allow neighborhoods to contract more than 50 percent of their NRP Phase II allocations while the city seeks legislation to move some or all of the money currently in NRP to the new Neighborhood and Community Relations Department. The hope is that this would then allow the City to cut in half the Tax Increment Financing (TIF) district that funds neighborhood organization work and Target Center debt by using funds from the old NRP fund to pay for the neighborhood portion.
The total NRP Phase 2 funds that would be restrained is roughly $11 million. The amounts that would be withheld from individual neighborhoods range from $3,000 to over $750,000 for Hawthorne. This will have no impact on the 2011 budget, but it paves the way for those funds to be used for other things in 2012 and beyond.
While I support efforts to reduce property taxes, I believe we should not do this by using any NRP money, and that we should not go to the legislature for this purpose. I believe that the City Council should hold true to the commitments we made to neighborhoods by not altering the allocations we unanimously approved in June to fully fund NRP Phase 2 (see item 6 at http://www.ci.minneapolis.mn.us/council/2010-meetings/20100618/CD20100608agenda.asp).
The Neighborhood Revitalization Program has been a successful 20-year experiment in community empowerment, decentralized decsion making, grassroots democracy, and economic justice that has contributed enormously to the long term economic, physical and social well being of our City.
There are many places besdies NRP funds to look for budget cuts and property tax relief in 2012 and 2013. As one possible alternative among many, I believe that it is time to transition ownership of the Target Center basketball arena to a regional or statewide entity like the Metropolitan Sports Commission.
There is one more public hearing on the City’s proposed 2011 budget, to give the public a chance to share their thoughts on the proposed budget and tax levy: it’s on Monday, Dec. 13, at 6:05 p.m. in City Hall, 350 South 5th Street, room 317. I hope that people will comment at the meeting, or by email or phone to my office beforehand.
I am currently working on efforts to delete or amend the Ways and Means staff directions dealing with NRP.
Whatever happens with this year’s budget, I do believe that the annual property tax increases levied in the last few years are not sustainable. I will continue to work to make sure we are managing this difficult financial situation in a way that balances the need to keep taxes down with the need to avoid drastic cuts in critical services, like those provided by neighborhood organizations, that would lead to more expensive long term consequences.