When it's about city taxes, devil's in details for Minneapolis, St. Paul mayors

When Minneapolis hardware store owner Jim Welna got the chance to buy a building in the next block on Franklin Avenue and quadruple his floor space, he sat down to run the numbers.

They didn't add up -- in large part because of the property tax he'd have to pay. He figured that he would have to budget nearly $140 from each day's proceeds just to pay that $50,000 annual bill.

"I couldn't see a business model that would allow me to factor those taxes in and keep prices affordable," said Welna, who is chairman of the Seward Civic and Commerce Association.

Property taxes, which have risen steadily in Minneapolis and St. Paul, are likely to continue that trend. Minneapolis Mayor R.T. Rybak proposes to raise city property tax collections by 11.3 percent next year, the most during his two terms, after a string of 8 percent increases dating to 2003.

St. Paul Mayor Chris Coleman proposed a 6 percent increase in the city's share of property taxes after levy increases of 9 percent, 15.1 percent and 8 percent during his first three years as mayor.

Both mayors are acting like potential gubernatorial candidates, and they blame Gov. Tim Pawlenty's no-new-state-tax policy for the local increases that could be drags on their campaigns.

Still, there's no sign of a property tax revolt in either city.

Both mayors are buffeted by offsetting pressures when they recommend raising property taxes. Not enough, and there aren't enough cops, workers to fill potholes or clerks to staff counters. Too much, and people such as Welna feel the pain.

Rybak swears that he puts political blinders on when he crafts a city budget and any tax hike he thinks is necessary to support it. He says his job is to do what's in the city's long-term interests. He blames tax increases on Pawlenty's policies and inherited problems such as a growing pension burden.

Coleman says that he's had to raise taxes in part to keep police and firefighters on the streets after state aid cuts. While his predecessors avoided significant levy increases for 12 years, Coleman says that was when state aid was dependable.

Just how much each mayor would be hampered by their taxing records in a statewide race depends on whether they're competing inside their parties or running in a general election, and whether President Obama's stimulus efforts pay off or are seen as a waste of money, analysts say.

Pollster Bill Morris of the Minneapolis research firm Decision Resources found a substantial drop in support for the no-new-taxes approach since Pawlenty's first legislative session in 2003 -- from 61 percent then to 33 percent this summer. Yet property taxes remain the most unpopular of the big three taxes, the other two being income tax and sales tax.

Still, the mayors' records concerning property taxes are likely to have much less impact on DFL delegates and intra-party contests than the crucial swing voters whom Hamline professor David Schultz estimates at 30 percent of voters.

"I can see Republicans trying to frame one of those two candidates as a classic tax and spend liberal," he said.

'Willing to pay'

In St. Paul's West End area, at Jefferson Avenue and Fulton Street, Matt Long, co-owner of Tavern on the Avenue, sees the city's police force as exceptional and worth protecting. Across the avenue, John Evanson, 37, who owns a single-story Craftsman-style home, values the city's culture and history.

Here, where home values mirror the city's median value, St. Paul is investing.

Evanson said that he's had job offers elsewhere but that he loves St. Paul. He said a 6 percent tax increase is significant, but that "if we want what we want, then we have to be willing to pay for it."

Long said he's been hit with the federally imposed minimum wage increase and the state's new 3/8-cent sales tax, and that he'd prefer not being dealt another property tax increase.

He calculated that, if Coleman's plan passes, the tavern will need to ring up more than 100 extra sales a month to cover the property tax hikes imposed on the bar since Coleman took office.

'It just went skyward'

In Minneapolis, Welna has seen the city's valuation assessment on his 108-year-old building jump from $70,000 to $325,000. With many home values falling, property tax increases fall more heavily on commercial property. His annual tax bill is almost $7,700.

But Welna and other businesspeople feel that their tax load is getting burdensome. Joanne Christ, whose family owns the Black Forest restaurant on Nicollet Avenue, described it this way: "It was a nice gentle climb until about seven years ago, maybe eight. Then it just went skyward."

Rybak's projected budgets portend a hefty tax increase for the city's $216,000 median home. The city's levy against that property is projected to rise 55 percent between now and 2015. That's not counting county or school taxes.

The Northrop neighborhood in south Minneapolis abounds with houses close to that example, and Judy O'Brien's bungalow is one of them. She has lived there all but about five years of her life, buying it from her parents in 1980. She thinks her tax bill was about $500 then; now it's $2,718.

"It's hard to see things go up like that every year," O'Brien said. "But it's unrealistic to expect it to go down."

She pays almost twice as much in taxes on her house as do her friends in the suburbs. But that hasn't driven her out of town. "I wouldn't have chosen to live in the suburbs," she said. "I like older neighborhoods. I like to watch the neighborhoods change."