The city of St. Paul will likely collect more taxes next year, but that doesn’t mean all property owners will see higher tax bills.
Mayor Melvin Carter has proposed an 11.5 percent property tax levy increase as part of the 2019 budget. Overall, the city would collect $158 million in property taxes — about $16 million more than in 2018.
The levy, and its effect on individual residents’ property taxes, is commonly misunderstood. The levy is the amount of money that the city collects in taxes, not the amount that individual property owners pay. If the levy rises 11.5 percent in 2019, the owner of a median-valued single-family home — which in St. Paul is $186,200 — would pay $76 more in property taxes.
“No matter how many times I’ve tried to explain it, the word ‘levy’ gets equated to ‘tax,’ and it’s different,” City Council President Amy Brendmoen said Wednesday at the council’s first budget committee meeting of the year.
Overall, property values in St. Paul are higher than they’ve ever been, but the only way for the city to collect more taxes is by raising the levy. Otherwise, changes in property values are just a change in the portion that each property owner pays, Chris Samuel, Ramsey County auditor/treasurer, said at Wednesday’s meeting.
“If your property goes up significantly in value and everybody else stays the same, you’re going to have higher property taxes and everyone else is going to have slightly lower property taxes,” he said.
Property owners can appeal the assessed value of their property in March, when Ramsey County sends out valuation notices. The state has a property tax refund program, which reimburses property owners whose taxes have risen significantly from one year to the next.
It’s possible that the 2019 levy increase will ultimately be lower than 11.5 percent. After a series of budget committee meetings and opportunities for public input, the council will approve the final 2019 budget on Dec. 12.
Carter unveiled his $606 million budget Aug. 9, along with an ambitious list of new city programs and services that he wants to implement next year. To make that happen — and to keep pace with the rising costs of running a city — city officials are looking to a levy increase and some spending cuts.
“Our spending grows every year and our revenue doesn’t, and that puts significant inflationary pressure on our budget each year,” said John McCarthy, the city’s budget manager.
About 80 percent of St. Paul’s general fund budget pays for employee salaries and benefits. This year, more than half of the anticipated $14.6 million gap between spending and revenue was due to salary and benefit increases in the police and fire departments, McCarthy said.
The bulk of the city’s revenue comes from property taxes and local government aid from the state, which is calculated based on the city’s unmet revenue need. The aid St. Paul receives does not meet its calculated need — in 2019, the disparity between unmet need and local government aid will be the highest of any city in Minnesota, at nearly $41 million.
Carter’s proposed budget includes a wide range of initiatives, from resurfacing streets to paying overtime costs when fire department employees take military leave.
On Wednesday, council members had a lot of questions about where cuts will be made and which proposals will require new spending. Their questions will likely be answered in coming weeks, when city department directors go before the council to provide details about their individual budgets.
“I think a lot of things we’re very supportive of,” Brendmoen said, “but we need to know where the money’s coming from.”