A year after her predecessor cut the city’s property tax levy, Minneapolis Mayor Betsy Hodges must balance the city’s growth with residents’ demands for services as she prepares to deliver her first budget on Thursday.
The mayor’s office has so far been mum on the details of the $1.2 billion plan, which allots money for everything from sewer repair to police and fire. The budget proposal comes during a boom time in the city’s economy and a year after the Legislature boosted aid to cities and counties, which legislators claimed would take pressure off local government finances and end years of property tax increases.
A defining question for Hodges, the council’s former budget committee chairwoman, is whether she decides to raise the amount the city collects in property taxes. Budget documents from last year show that the tax levy would already have to increase by 2 percent to pay for existing financial commitments and keep up with inflation. The impact on individual homeowners will depend largely on changes to the tax base, since the levy is merely a dollar amount that is spread across all taxable city properties.
“We have growth in this city,” said Council President Barb Johnson, noting an uptick in home and commercial property values. “So I think our taxpayers would have their eyebrows raised if we didn’t have at least a flat [rate].”
Council Vice President Elizabeth Glidden said she is expecting a low levy increase, somewhere between zero to 2 percent.
“I don’t think there’s appetite — not from me at least — for what you would consider a high levy,” Glidden said. “So I think I would want to see that as low as possible, understanding that sometimes there’s kind of some financial realities in terms of inflation and other things.”
Carol Becker, a member of the city’s Board of Estimate and Taxation, which approves the levy, said she will be watching closely for any proposals to take properties off the tax rolls for specific redevelopment initiatives — like paying for the new Downtown East park.
She is monitoring the impact of a special district created in 2013 that redirects property taxes from several major new apartment projects to fund a streetcar along Nicollet Avenue. “It takes money out of the tax base,” Becker said.
Hodges’ first budget will also have to pass muster with a City Council filled with many young, ambitious new members. Johnson said she is expecting a particularly active debate running up to their final approval in December.
“We could see some fireworks,” Johnson said. “What people will find out is once the budget has been set and then the Board of Estimate acts on the levy, you’re kind of in a straitjacket.”
The city’s budget comprises two key components: a discretionary general fund and other funds largely dedicated to specific purposes. The general fund, which pays for services like police and fire, comprises about one-third of the total budget.
Budget documents show that total spending has fallen about 4 percent since 2011, but general fund spending has risen by 21 percent. The total number of full-time city employees, meanwhile, has dropped to 4,874 in the same period, down 1.5 percent. That includes the city’s semi-independent Park Board.
“I think there are some pent-up demands, particularly in public safety for more firefighters and more police officers,” Johnson said. “So I hope she addresses that.”
Glidden said the council has a new budget process this year, inviting everyone to participate in the budget committee’s review process. She hopes it will reduce the last-minute changes. “It’s very hard to react to changes in that moment and get good information,” Glidden said.
Hodges will deliver the speech at 11 a.m. Thursday in the City Council chambers. The public can view the speech online at minneapolismn.gov/tv/79.