LEVY091307

Minneapolis City Council caps tax levy at 8%

How the increase will affect a homeowners' taxes will depend largely on changes in property values. Budget hearings are scheduled to begin Sept. 24.

By Steve Brandt, Star Tribune

Last update: September 12, 2007 - 8:27 PM

City property taxes in Minneapolis will rise as much as 8 percent next year, although the tax bills for individual homeowners could reflect a higher increase.

The city Board of Estimate and Taxation set the levy ceiling for 2008 by a 6-1 vote. Board member and Park Commissioner Bob Fine dissented -- he wanted more money for parks.

The vote means that the city will levy $244 million next year for police and other services overseen by the City Council, as well as parks, libraries, public housing and pensions. That's up from $226 million this year.

The vote conforms to the council policy set in 2002 to raise the tax collected by 8 percent annually. Those increases are intended to offset cuts in state aid and to help the city restore its financial house in several areas.

The city portion of the bill will be augmented by tax increases approved by Hennepin County and the school board.

The council won't start addressing how the levy is spent until Mayor R.T. Rybak pitches his 2008 budget on Sept. 24. That sets off council budget discussions that end on Dec. 8.

In general, homes will shoulder more of the load than commercial properties. That's because residential values increased faster through the start of 2007 and the state is phasing out a cap on annual increases in taxable value. The more recent slide in home values won't help with property taxes until 2009.

How a homeowner fares will depend on whether a house's value rose more or less than the citywide gain of about 9 percent, and how much of its taxable value was shielded.

Generally, a house's tax increase will be close to its gain in market value. A $145,000 home with no gain in value will see a 1.2 percent tax drop; a $225,000 home with an 11.6 percent gain will see an 11.9 percent tax hike.

Steve Brandt • 612-673-4438

Steve Brandt • sbrandt@startribune.com