Rybak proposes unprecedented 1% tax decrease

Minneapolis Mayor R.T. Rybak proposed cutting property taxes Thursday in his final budget speech — an unprecedented move in recent city history.

After presiding over repeated tax hikes that drew public ire over the past decade, Rybak announced that his final spending plan would reduce the total property taxes the city collects by 1 percent. The announcement comes just months before a key election in which five City Council members are either running for mayor or fighting to keep their seats. Rybak is not seeking a fourth term, and his future plans remain unknown.

No one at City Hall could recall another time that the city's property tax levy had decreased, though Hennepin County has reduced it several times in recent years.

"The bottom line on property taxes is in tough times, we asked our residents to give a little more to keep Minneapolis strong," Rybak said. "And now, as times get a little bit easier, we're going to ask them for just a little bit less."

With the exception of a flat levy in 2012, every Rybak budget has raised property taxes — the most recent was a 1.7 percent increase in 2013. Property taxes now account for 45 percent of the city's general fund, up from 29 percent a decade ago. The mayor's office said the total amount levied has risen from $144.3 million in 2002 to $281.6 million in 2014, a 95 percent increase.

The Rybak administration has cited cuts in state aid, pension obligations and the need to pay down outstanding debt as causes of the tax increases. What changed this year? The city got a 20 percent boost in state aid and also set aside $7 million in unspent funds from 2012 to help alleviate tax pressures. Additionally, the mayor credited the Vikings stadium deal and recent state pension reform for putting the city on sounder footing.

Whether homeowners experience a decrease under Rybak's proposal will depend on the changing value of their homes. Data from city staff show that in the last year, about one-third of Minneapolis homes experienced a decrease in market value, one-third had no change, and one-third saw an increase in market value.

The firefighters union, which had asked for 40 more firefighters, was not satisfied with Rybak's announcement. Mark Lakosky said 15-person classes have been graduating an average of only nine firefighters, which may not increase total staffing levels when combined with attrition.

"That's no growth," Lakosky said. "That won't even keep up with attrition in this next couple of years."

Also in the fire department, Rybak announced a pilot program that would send SUVs with emergency medical specialists to some medical calls rather than fire trucks, which "get about zero miles per gallon." That would be coupled with an expansion of the city's EMS certification program for public school students, he said.

The budget would pay for putting every Minneapolis police officer through "cultural competency training" and expand the police department's auditing and early warning systems to catch bad cops, after the department has faced negative publicity from officers allegedly making racial and other derogatory slurs.

"We will not allow a small group of people in this department to ruin the work that has been done throughout this city. … There is no place for racism and discrimination," said Rybak.

"I know 37 different reasons are going to come up why this is inconvenient," Rybak said. "But folks, it's time for us to have some of the bold vision that we've had for bikes for pedestrians in the city. America's No. 1 bike city should also be America's No. 1 pedestrian city."

All of Rybak's proposals are subject to approval by the City Council, which will approve the final budget in December. The maximum levy will be set by the Board of Estimate and Taxation this September. Two of the other government entities that make up Minneapolis residents' property tax bills — Hennepin County and the school board — have not yet proposed their levies. The Minneapolis Park Board has proposed a levy up to 2.5 percent dedicated for trees.

After Rybak's speech, Council Member Gary Schiff said the city should look at the possibility of cutting even more, noting that the mayor had proposed spending increases in some areas. He questioned whether adding Saturday hours for 311 calls was really needed; 311 is a resource for citizens to get information and report problems such as graffiti or potholes.

"With 311 calls, are people just calling on Saturday for what they would have called Monday morning for, or you providing more of a service?" he said.

Council President Barb Johnson described the small decrease "as step one" in keeping property taxes down over the long term. "You've got to start some place."

Eric Roper • 612-673-1732