Last week, the St. Paul City Council set a maximum property-tax levy increase of nearly 8 percent for property owners. That’s the largest recommended hike in years — and it’s more than Capital City taxpayers should have to bear. The council and mayor must do what it takes to reduce that possible hike before the final budget is approved.
On a 4-3 vote, the council approved a maximum levy of 7.9 percent, which would raise nearly $114 million for 2017 city coffers — about $9 million more than the current levy. Mayor Chris Coleman did not want to exceed a 7 percent hike, and had vetoed the council’s earlier 8.6 percent increase. But the council passed the higher amount, noting that areas such as youth services, more firefighters and park maintenance require additional funding.
In defense of both sides, this budget conflict might have been avoided had Republican state lawmakers and Gov. Mark Dayton passed the tax bill that includes funding for cities. In August, Coleman proposed a 4 percent maximum levy increase that assumed the city would receive a $3 million increase in state aid.
As the Editorial Board argued repeatedly this spring and summer, local governments shouldn’t have to suffer financially because of state leaders’ inability to compromise. And there’s still time to hold a short special session and send much-needed funding to local governments.
Should the Local Government Aid (LGA) come through, St. Paul and other cities could revisit their levy plans. But if it doesn’t, the maximum St. Paul levy proposal would result in about a $50-per-year increase for the median $161,000 city home. During last week’s Joint Property Tax Advisory Committee meeting, Ramsey County officials said levies and tax shifts from the city, county and school district would result in a $93 to $105 increase on the tax bill of a median value household.
That may not sound like an excessive hike on its face. But St. Paul residents should be aware that the city’s annual right-of-way assessment, based on a property’s street footage, adds to the city portion of the tax bill.
In addition, property values are going up. In some of St. Paul’s lower-income neighborhoods, value increases are estimated to double or triple tax bills for seniors and others who are least able to afford it. “This is going to be a huge burden on the fixed-income folks,” said First Ward council member Dai Thao, one of the three “no” votes on the higher cap.
Taxes on commercial properties could also rise significantly under the approved maximum. At a time when the city seeks to encourage more business and job development, such increases could discourage new enterprises or push current ones to more tax-friendly metro cities.
The recession is over, but that does not mean the pressure is off to control spending and keep taxes in check. Coleman and the City Council should keep that in mind as they work toward a final budget approval in mid-December.