With the possible exception of health care premiums for some, few annual price tags go up by nearly 24 percent. Yet that breathtakingly high increase is what St. Paul Mayor Chris Coleman proposed in his recent 12th and final city budget address. After three terms, he is not seeking re-election but is running for governor.
It’s a tax levy hike that would be tough for many property owners to bear. But at this point, it is still a proposal — one that must still be discussed, altered and approved by the City Council by the end of the year. In the next few weeks, council members should focus on ways to bring that recommended increase down.
Coleman says he was forced into proposing the 23.9 percent hike because of a court challenge to St. Paul’s method of paying for city services. Last year, the state Supreme Court found that more than $30 million in charges for city services, called right-of-way fees, are an impermissible tax, not a fee. To help plug that budget hole, Coleman proposes shifting $20 million that had been collected in fees onto the regular property tax rolls. The other $10 million would continue to be charged as a separate assessment — a reasonable way to collect for services such as street lighting and maintenance.
As a result, the mix of lower fees and higher taxes would balance out for some property owners. Coleman notes that those with lower-valued homes may see a reduction in the total charged but that owners of higher-valued properties would see increases. A median-value home with a market value of $161,400 in 2017 and $173,900 in 2018 would pay $752 in city property taxes next year, up from $591 in 2017. Given the drop in fees, the net change for those homeowners would be a $12 increase, before utility fees, or $77 after.
The mayor pointed out that the shift doesn’t bring any new revenue to the city; rather the same amount is collected in a different way. And even with that change, the total tax collections actually will drop by $1.5 million next year, going from $563 million in the current year to $561.8 million in the 2018 proposal.
That alone may not seem like a difficult tax burden. But it is still important to keep the rate down when considered with all of the other factors that affect the city’s taxpayers. Rising property values raise taxes. Higher-valued home and commercial places could see more than 15 percent overall hikes. Ramsey County’s proposed budget for 2018 and 2019 calls for a property tax levy increase of 4.3 percent each year. And the St. Paul School District, which is also facing budget challenges, starts its budget discussions this month.
Coleman’s budget includes some worthy investments — including six new cops (four with special mental health training); $750,000 for officer bodycams, $1.2 million in additional funding to handle emerald ash borer tree infestation and continued funding for youth jobs programs and community ambassadors.
Coleman said it was difficult to recommend such a high levy increase, but that any other choice would have “compromised public safety, reversed the progress we’ve made in building world-class libraries and parks, and eroded the vibrancy and quality of life” that are stimulating new investment. He added that another choice would have been to “pass the problem on to my successor,” which wouldn’t have been fair to the new mayor.
The risk, though, is that the progress St. Paul has seen under Coleman also could be reversed if businesses and property owners are driven out by higher tax burdens. Before the final tax levy is set, Coleman and the council should do whatever they can to minimize that risk.