More than 1 in 5 St. Paul households have no net worth. One in 3 do not have enough money to live for three months if they lose their income. Nearly 1 in 10 do not have a bank account.
Mayor Melvin Carter wants the city to step in and start helping low-income residents build wealth. As part of his 2019 budget, the mayor is asking the City Council to allocate $333,000 to create a city Office of Financial Empowerment.
“Our perspective is, we need a new approach,” Carter said. “Our budget analysts have spent forever saying, how do we increase the city’s credit rating? And how do we make money work for the city as an entity? We’re doing the same thing, but saying, let’s do that work for the city as a community as well.”
Cities across the country already offer similar services. Nashville has provided free financial counseling to residents since 2013. In Boston, residents can get free help doing their taxes at 27 sites across the city. In Detroit, city officials launched a public awareness campaign in 2016 to urge residents to claim the federal Earned Income Tax Credit — and more than 18,000 did.
In St. Paul, the office would be located within the existing Office of Financial Services, and would include two new hires: a director and a coordinator for the mayor’s college savings account program. The Office of Financial Empowerment would also include a new fair housing coordinator position, which would be paid for by the proposed affordable housing trust fund.
Carter’s 2019 budget includes an 11.5 percent property tax levy increase — an increase of $76 a year for a median-value home. City Council members have pledged to lower the levy increase before approving the final budget.
Unlike some other cities, St. Paul will not provide financial services directly to residents. Rather, the Office of Financial Empowerment will help residents find existing resources, whether it’s a local credit union where they can open a savings account, a nonprofit that offers one-on-one financial counseling or information about applying for tax rebates.
At a budget committee meeting Wednesday, City Council members pressed for details about what the office will do, and how it will work with organizations that already offer financial services to low-income St. Paul residents.
“I’m very enthusiastic about the ideas behind this proposal,” said Council Member Rebecca Noecker. “I’m trying to get a better sense of exactly how it’s going to roll out because I do think in this budget, as we’ve talked about, we are taking dollars from people in the form of taxes, and saying that this investment will be worthwhile, especially for those of our residents who are going to need it the most.”
Finance Director Todd Hurley said plans for how the office will work are still in early stages, but some work has already begun.
City officials met with more than a dozen local nonprofits and financial institutions Oct. 9 for a daylong “Office of Financial Empowerment boot camp.” One of those nonprofits, Prepare and Prosper, has been talking to Carter since he was elected, said Executive Director Tracy Fischman.
In St. Paul and the region, there are significant numbers of “people who are struggling to meet basic needs, who have very little, if any, in liquid savings, who may be one emergency away from a financial crisis,” she said. “And they may be completely or partially shut out of banks or credit unions.”