The St. Paul Federation of Teachers launched its campaign for a new two-year contract Tuesday by holding a "Tax Day" rally at a U.S. Bank facility on the West Side.

The union wants people to know that the state's second-largest district does not collect all it can in property taxes from corporations like U.S. Bank that operate within tax increment financing districts.

"Those who have the money are not paying their fair share," Denise Rodriguez, the union's president, told a crowd of about 40 activists and supporters, including three mayoral candidates.

St. Paul also is home to tax-exempt colleges, hospitals and churches, and it was announced last week that the Citizens League will help the city decide whether to create a "payment in lieu of taxes" program that allows those property owners to chip in for local services -- an idea Rodriguez supports.

When it comes to negotiations, the union and the district will have plenty to talk about it. For a second consecutive year, staff cuts are in the works to fix a significant budget shortfall.

In an email to staff members three weeks ago, school board Chairman Jon Schumacher shared a plea he made to teachers that they reconsider class-size limits negotiated three years ago and also join the district in pursuing a Q Comp alternative teacher pay plan that he said could generate state revenue for professional development activities already in place -- and paid for by the district.

For years, the union balked at working with former Superintendent Valeria Silva on such a proposal.

But with state funds for that purpose now capped, and 13 districts in line waiting for it to be lifted, Rodriguez said she did not believe a deal could be reached in time for the district to collect the revenue and, in turn, cut into the projected $27.3 million shortfall for 2017-18.

Still, she said, the union has not closed the door on the subject, adding, "That discussion belongs at the negotiating table."

The union's success in lowering class sizes was heralded as a victory in 2013-14 contract talks, and is noted in a booklet distributed Tuesday titled, "The Schools St. Paul Children Deserve: Progress Report."

In his email to staff members, Schumacher said that the hard enrollment caps have increased costs by $11 million to $13 million annually, and that greater flexibility was needed so the district could fund science, art, music and other electives that are valued by many families.

"Every day we compete with a variety of educational institutions that offer our families choices," he said. "We cannot continue to put our district at a competitive disadvantage, so we need to talk about ways to make class size decisions work better and smarter."

The federation, in its progress report, said that its goal is to "hold firm to current class-size commitments in all grades and subjects" and to further reduce class sizes in earlier grades and for the district's most disadvantaged students. Asked about Schumacher's message, and the potential of raising the caps, Rodriguez said: "No, we are not open to that."

Talks are expected to begin next month.

Rodriguez, a Harding High graduate who has served in the district for 39 years, announced recently that she will retire in June. In recent years, she's undergone several operations on her right ankle, and she learned last month that she now has to have surgery on her left foot.

"I think it's time to step back and focus on my recovery," she said.

Nick Faber, the union's vice president, is running unopposed to replace her.