Deal reached that would trim Minneapolis property tax hike

  • Article by: STEVE BRANDT , Star Tribune
  • Updated: December 7, 2010 - 7:50 AM

Proposal by Minneapolis leaders would trim the proposed levy hike to 4.7 percent, but many homeowners still would face stiff increases.

Minneapolis taxpayers, you're having an impact at City Hall.

Mayor R.T. Rybak and key City Council members completed a budget deal Monday that would limit the increase in the city's 2011 property tax collections to 4.7 percent, rather than as much as 7.5 percent.

A 7.5 percent hike in total collections would have raised taxes on more than 90 percent of residential property in the city. The corresponding figure with the 4.7 percent proposal hasn't been computed yet. However, many homeowners still are likely to pay substantially more next year because the tax burden is shifting to residential property from other classes.

Monday's deal was negotiated after taxpayers riled by November's notices of proposed taxes flooded some council offices with calls or e-mails.

"Sometimes, you have to listen and change," Rybak said Monday evening.

The deal also involved Council President Barbara Johnson and Council Member Betsy Hodges, who chairs the budget committee that Tuesday will amend the budget Rybak proposed in August.

The amended proposal is scheduled for adoption next Monday after taxpayers get one more chance to sound off at 6:05 p.m. that day. A rally by disgruntled taxpayers is planned at City Hall an hour before that.

The deal proposes $6.1 million in spending reductions from the August proposal. In addition, there would be other longer-term scale backs. The latter include a proposed two-year wage freeze for city workers and the elimination of additional funding for neighborhood-level programs that the council approved last December.

The wage freeze would have to be negotiated with a multitude of bargaining units representing the heavily unionized city workforce. The city is expected to argue that the freeze would help prevent more layoffs.

The neighborhood-money proposal is more complex. Basically, it would use money that was set aside for Phases 1 and 2 of the Neighborhood Revitalization Program (NRP), but hasn't been committed yet, to fund Phase 3. That would take legislative approval.

Phase 3 was to have been funded with a tax base that the council last year dedicated to NRP as well as to Target Center debt. By tapping previously reserved neighborhood funds, architects of the deal say, some of that reserved tax base could be unlocked to support the city budget and lower tax hikes. There would be a freeze on NRP transactions pending the legislation and an attempt to equalize the impact among neighborhoods.

Based on past City Hall efforts to tinker with neighborhood funding, community activists are likely to object vociferously to that proposal. "Anything we propose at this stage will be controversial," Rybak said.

The $6.1 million in immediate budget trims would allow the mayor and council to get through 2011 with the smaller tax hike. Rybak said he wants the longer-term cuts so the budget is balanced in future years as well.

The immediate cuts include putting $2 million less into the city's fund for future pension costs, delaying $1.5 million in pending capital improvements at Target Center, cutting the levy for public housing by $1.4 million, cutting by $1 million the city's contribution to its recovery plan for once-insolvent internal revolving funds, and trimming $250,000 from the building staff that operates City Hall.

Steve Brandt • 612-673-4438

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