ADVERTISEMENT

More details emerge about Minneapolis budget proposal, levy increase

  • Blog Post by: Eric Roper
  • August 29, 2014 - 3:03 PM

The mayor’s office released the first details Wednesday night about what is driving their proposed 2.4 percent levy increase, and precisely what it will mean for taxpayers.

The tax levy is a dollar amount the city collects through property taxes. Since it is not a tax rate, the impact on individual homeowners depends on changes to the tax base and individual home values.

The mayor’s proposed 2.4 percent increase aims to raise $6.7 million more in property taxes, bringing the city’s total levy to $288 million (see below). Almost all of that increase, $6.6 million, will be consumed by additional debt payments primarily relating to R.T. Rybak’s five-year accelerated street paving program, according to an overview presented to the city's levy-setting Board of Estimate and Taxation Wednesday.

A 4.9 percent, $2.4 million levy increase from the Park Board also contributed heavily to the mayor’s proposal. In fact, the amount of property taxes supporting the general fund, which fuels the city’s discretionary spending, will actually decrease by $2.3 million or 1.5 percent.

Total city spending, which includes dedicated funds for water and other services, will rise 4.8 percent in Hodges’ budget to $1.18 billion. That excludes department-to-department transfers.

So how will it feel for homeowners?

Nearly 57 percent of residential properties in the city will see an decrease in their property tax bills, with the remaining 43 percent seeing an increase, according to an analysis presented to the Board.

One additional cost will be felt equally, however: A $48 hike in solid waste utility fees due largely to the mayor’s proposed organics recycling program (see "Solid Waste Recycling" below). That’s a 17 percent increase over 2014 costs. The program will cost about $8 million to administer in its first year, said Sandy Christensen, the city’s deputy financial officer.

A home worth $240,000 in 2014, growing 5 percent in value next year, would see a 2.3 percent reduction in property taxes – which would be offset by the new garbage fees. Use the tool below to see the impact on different homes.

A big reason why fewer than half of homeowners will see rate increases is that the city’s tax capacity is expected to grow by nearly 10 percent by 2015. A lot of that is due to apartments, which are slated to shoot up a whopping 21 percent in value during that time period.

Apartments now shoulder a 2 percent larger slice of the city’s tax base, 19.3 percent, than they did before. THe mayor's spokeswoman, Kate Brickman, said it is difficult to discern how much of that isattributable to new properties, versus the increasing value of existing ones. About three-quarters of the tax base is still derived from residential and commercial properties.

As for how the money will be spent, much of that will be outlined in the budget book that has not yet been released. The new department breakdowns anticipate a 3.9 percent funding increase for the police department, a 1.5 percent increase for the fire department and a 4.4 percent increase for the health department.

Much of that extra funding is expected to fund new recruits in the police and fire departments, as well as more youth support and health inspections in the health department. Hodges highlighted other initiatives in her budget speech. See the full overview by department below.

The mayor’s budget is subject to approval by the City Council, which will review it for the first time at a budget committee hearing on September 8.

Also on Wednesday night, Hodges jabbed back at a Board of Estimate and Taxation member, Carol Becker, who had complained that the full budget was not yet available. Hodges pulled out a stack of budget books from the 1990s, when Becker worked in the budget office, to show that they were delivered later during that period.

The video is below. Becker responds at 52:49:

© 2014 Star Tribune