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Facing the prospect of onerous property-tax increases on residents next year and beyond, it’s time for Minneapolis City Hall to take a serious look at diversifying how it finances city services, including seeking the power to impose a municipal income or wealth tax.
That may be a startling idea, but with several years of nasty property tax increases for residential property projected ahead, it’s vital to explore.
A modest tax on higher incomes or accumulated wealth could help to offset the regressive impacts of ever-increasing property taxation as a mainstay of city finances. Regressivity means that lower-income people pay a higher share of their household income than wealthy people.
Finding new revenues is one long-term budget-balancing idea that I carried to a recent meeting with Mayor Jacob Frey. But I also suggested some shorter-term steps that could help bridge the city’s $21.6 million budget gap for 2025. City finance officials project such a gap will continue through at least 2030. That gap is based on merely maintaining current service levels for existing programs. The gap calculation factors in maintaining current services plus solidified-cost items for next year, such as already negotiated or expected salary increases for city employees.
Why should you care?
If you’re a homeowner, this budget gap exists even if the property levy rises by 6.1% in 2025 — the target set by the City Council last December as part of its five-year budgeting scenario.