Minneapolis Mayor R.T. Rybak proposed increasing city property taxes by 1.7 percent in his annual budget Wednesday, one year after managing to hold them flat.

The mayor said that the increase would have been about 3.4 percent had it not been for the Vikings stadium legislation, which alleviates the city of financial obligations to the Target Center. He also said the suite of sales taxes that will pay for the new stadium, estimated to grow at 2 percent a year, are "coming in at 4 percent higher than last year."

The mayor's office said 70 percent of homeowners would see no increase -- or possibly a decrease -- in their city property tax levy because commercial property values have stronger than residential values.

Rybak's budget proposal, which is subject to approval by the City Council this fall, also hands much more power to the city's development agency months after the mayor installed his chief of staff to run it.

The budget would move business licensing and Development Review, now under the purview of Regulatory Services, to the Department of Community Planning and Economic Development. Rybak's former chief of staff, Jeremy Hanson Willis, recently began running that department.

In what he called the "most significant internal restructuring of City services since 2002," Rybak said the change would save the city at least $300,000. 

Rybak also proposed increasing the police department's budget by $2.5 million -- about 1.8 percent over last year -- to pay for new officers. That includes a new class of community service officers and a new recruit class of sworn officers.

The budget would increase the personell budget of the fire department by $1.1 million and starting a new recruit class with "one-time 2012 dollars."

Rybak warned that the fire department is rapidly aging, with an average age of about 46. "At some point, we could see a surge of retirements, so we need to be building homegrown staff for the future," Rybak said, according to prepared remarks. 

Other highlights of the mayor's speech include: forming a new effort to help homeowners to stay in their homes called Project Homeowner Connect; allocating money to reopen Nicollet Avenue at Lake Street, now the site of a K-Mart; possibly opening negotiations to expand the scope of 311 to other governments/institutions in an bid to lengthen its hours.