Editorial: Holding the line on property tax hikes

Responsible budgeting that included paying down debt, making smart investments and pursuing pension relief brought the city of Minneapolis to this point: For the first time in 10 years, Mayor R.T. Rybak is proposing no city-driven property tax increase for 2012.

That's welcome news for taxpayers, especially those who are underwater with their mortgages and those having trouble meeting their own budgets in a tough economy.

Some residents let the mayor know last year -- loudly and often -- that his initial proposed tax hike was too much. That outcry prompted Rybak and the City Council to trim back the 2011 increase to 4.7 percent.

By holding the line this time around, Rybak is making it clear that he paid attention. But he also deserves credit for years of responsible budget management -- including making some unpopular cuts in the face of declining state aid.

After adjusting for inflation, the city spends 8 percent less than it did in 2001. Minneapolis has 10 percent fewer full-time positions than it did a decade ago. And the city has paid off $183 million in debt while making strategic investments in public safety, infrastructure and economic development.

Rybak's administration also deserves praise for doggedly pursuing relief from closed police and fire pension plans that cost the city millions each year.

This year the Legislature approved merging the two funds into a state plan, and both pension fund groups recently supported the negotiated agreement. That merger will save the city $17.4 million next year.

The police pensions will grow to $64,000 annually by 2015. The city is able to cut its pension liability because the funds will assume higher investment returns and lower annual pension increases under the state plan.

The pension agreement did not include everything the administration wanted; its original plan would have saved $19 million. Still, the compromise offers much-needed relief and cleans up a mess.

Rybak emphasized in an interview with the Star Tribune Editorial Board that the zero tax hike does not come pain-free. About 90 full-time jobs will be eliminated.

Even if the City Council approves the zero-increase levy proposal, some city residents will have larger property tax bills. The Board of Estimate and Taxation projects that a third of city properties will see an increase mainly because of the Legislature's elimination of the homestead tax credit.

Smartly, Rybak proposes borrowing $57 million over five years to repair city streets. That's in addition to the $93 million the city had already budgeted for repairs. The dramatic freeze-thaw weather pattern last winter left its mark on many pothole-filled Minneapolis roads.

And his proposal to hold the line in 2012 is made possible by that sensible approach.

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