It’s an eye-popping number for St. Paul taxpayers: a nearly 24 percent tax levy increase.
But when City Council members approved a maximum $141 million property tax levy Wednesday, they emphasized that much of the increase is a cost shift and residents would see savings on another city bill.
The jump in how much St. Paul could collect from property taxes next year — about $27 million more than this year — is the result of changes to how St. Paul pays for street maintenance. For years, the city has been sending residents a right of way assessment bill in addition to their tax bill and using the assessment revenue to cover costs like street sweeping, snowplowing and trimming boulevard trees.
The Minnesota Supreme Court ruled in August 2016 that amounted to another tax, and the city had to come up with a new way to pay for the road work. With few financial options, Mayor Chris Coleman looked to property taxes.
“It’s a very hard vote to take, but think it’s the right one,” City Council Member Jane Prince said of Coleman’s proposed 23.9 percent increase.
Of that, she noted, 19 percent would be the result of the shift to cover street maintenance, not new costs.
Under the mayor’s plan, the owner of a median value home — estimated at $173,900 next year — would see a $77 increase in city taxes and fees. That homeowner would pay a total of $1,556 for city services.
St. Paul plans to continue gathering some assessments from residents, but far less than it used to. The city will make people pay assessments only for certain types of street work that city officials have said would not conflict with the Supreme Court ruling.
Some City Council members had asked staff to look into eliminating the right of way assessment bills and shifting all the costs to property taxes. That would have resulted in a 33.5 percent levy increase, Chief Budget Officer Holly Huston said. She shared that information with council members and they did not pursue the idea further.
Council members decided to stick with Coleman’s proposed 23.9 percent increase when they set the maximum levy. But they could still lower the proposed levy by cutting costs.
“We’re going to have months of discussion ahead of us with each of our departments to try and make sure we make the best possible use of every dollar,” Council Member Rebecca Noecker said.
The council will adopt a budget in December, which could include changes to what Coleman proposed in August. Coleman can line-item veto the adopted budget.