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Are you ready for property tax and fee increases in your city? What's the alternative?

Last week, St. Paul Mayor Chris Coleman proposed an increase in the city's property tax levy and blamed it on the Legislature’s latest round of Local Government Aid cuts.

Coleman also proposed fee increases, or what he called “non-property tax revenue.” For many homeowners in St. Paul, the fee increases will be the larger burden — as much as $79 in fee increases for the year. This is a St. Paul story for the moment, but it won’t be for long.

In July, just before the latest Local Government Aid cuts were decided by the Legislature, we asked Minneapolis Board of Estimate and Taxation President David Wheeler for comment on what will most certainly be another round of property tax hikes for Minneapolis. "The bottom line," Wheeler said, "is we need the economy to improve." Failing that, he says, "We need to ask taxpayers, 'What is it you can live without? What would you cut?'"


That’s the question I’m putting to you today: Your city, wherever you are in Minnesota, is no doubt struggling. Will you accept property tax increases? Would you accept fee increases? And what is it you can live without in your city? What would you cut?

And what revenue-generating ideas not now in place do you support? The League of Minnesota Cities has, in the past, proposed tying local services directly to the beneficiaries — upkeep of a local street outside of a McDonald’s, for example, could be financed in part by a special fee paid by the restaurant. Or what about special fees for tax-exempt church or government properties?

I want to hear your ideas and objections in the comments. I’ll add bits and pieces of what you have to say into this post. Too often we have this discussion when it is too late — after property tax notices have already gone out. Let’s begin the conversation now.

Your voices (updated 8/23/11 at 8:45 AM)

Click on a person's name to see their full comment

"I have lived in my house in Saint Paul for 5 years. In that time my taxes have more than doubled and the value of my has has declined by more than a third. Why can't Minneapolis and Saint Paul charge a use tax for everyone who works in the cities and doesn't live here? I believe I pay enough taxes, there has to be another way. I can't make up for what Tea Party supporters don't want to pay and what the state is taking away."  —Pat Black

"We have no choice but to accept increases. Home values have fallen. It's not as if people can, in protest, sell their homes and move on. We're all trapped."  —CJ McCormick

"Really great to get this conversation going now — cities must have their proposed levies into the state in early September and 2012 budget discussions are happening now. As a local elected official, it will be interesting to see responses!"  —Patrick Backen

"In Minneapolis I would cut the size of the City Council and make them take the furloughs they want staff to take. I would cut the fluff — bike paths, the sustainability program and coordinator, any arts positions and projects, the Department of Health, Neighborhood & Community Relations Department, Civil Rights Department, as well as the excessive number of managers in many departments. You can have a conversation about what to bring back if and when the economy recovers." —Pat McGee

"In general, must say I am fine with the property tax increases as I know its mostly necessary until our economy picks back up ... I think a commuter tax like in Pittsburgh would be interesting to try. Minnesotans continue moving further away from Minneapolis but many still count on the city for their jobs and entertainment ... we need those who moved away to pay their fair share. The world has gotten much smaller in recent years but we keep on living as if nothing has changed."  —Adam Segar

"Adam says, 'Now we need those who moved away to pay their fair share.' We already have that. It's called local government aid (or LGA). Because Minneapolis and St. Paul are the economic engines of the state, they pump tons of money to the state in the form of sales and income taxes. Also, as you correctly point out, both cities are heavily used by people who don't pay property taxes or fees back to the city. That's exactly why LGA was created. LGA was a promise: Minneapolis and St. Paul would continue to pump income and sales taxes into the State's coffers, and in exchange the State would give a small fraction back in the form of LGA. The system worked great until Pawlenty broke that promise. The republican legislature continued to renege on that promise, drastically cutting LGA to the first class cities."  —Reggie McGurt

"A commuter tax sounds interesting and maybe promising. How is a commuter tax implemented? Parking tax? It would seem reasonable to levy a tax on parking in Minneapolis and St. Paul during work hours/days. All parking from 8 am to 5 or 6 pm, including parking garages/contract parking, could both increase revenue and decrease traffic during rush hour without impeding tourism-based revenue for shops and entertainment on evenings and weekends. It would also capture some additional revenue from sports fans coming to see a daytime Twins game."  —Rachel Kahler

"I propose that for every dollar of reduced LGA, Minneapolis withhold a dollar of taxes payable to the state and use that revenue to plug the LGA hole. No, it's not legal. But what if city leaders had the courage to threaten to do that? We could have an actual conversation about how LGA works, why we have it and the costs of eliminating it."  —David Greene

"One idea worth exploring, especially as urban-hating Republicans dominate the political landscape for the time being, is the “commuter tax” mentioned by Pat and Rachel. This is an idea that’s been in place in St. Louis (and probably many other cities) for many years, where it’s called a 'city earnings tax.' If you work in the city, your employer deducts from your pay check a small percentage (I’ve no idea what the actual numbers are now. I haven’t lived there in 15 years) which is used by the city as they suggest — to compensate and pay for infrastructure that’s used by people who work in the city, but whose homes are in the suburbs ... I’d be surprised if this gets off the ground any time soon, but it would be an effective way to at least in part address the current disparity between what the Twin Cities put into the state's economy and what they get back from the state in return."  —Ray Schoch

"The answer isn't to cut salaries or pensions or essential public services ... [instead, cities and counties] should not forward to the state all the property taxes collected, but should withhold the amounts needed to replace LGA as it would be without the Pawlenty cuts and the current ones. Is is our money, after all."  —Bernice Vetsch

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Comments (13)

I have lived in my house in Saint Paul for 5 years. In that time my taxes have more than doubled and the value of my has has decline by more than a third. Really I believe I pay enough taxes, there has to be another way. I can't make up for what tea party supporters don't want to pay and what the state is taking away.

I believe in paying taxes and as a citizen believe it is my duty but when will politicians start fighting for people and take on rich people and corporations. Why can't Minneapolis and Saint Paul charge a use tax for everyone who works in the cities and doesn't live here. Seems like people from the suburbs are the ones voting for these tea party policies. Let them pay to use the cities.

We have no choice but to accept increases. Home values have fallen. It's not as if people can, in protest, sell their homes and move on. We're all trapped.

Really great to get this conversation going now - cities must have their proposed levies into the state in early September and 2012 budget discussions are happening now.

As a local elected official, it will be interesting to see responses!

In Minneapolis I would cut the size of the City Council AND make them take the furloughs they want staff to take. I would cut the fluff. Fluff being bike paths, the sustainability program and coordinator, any arts positions and projects, the Health Dept. (RT campaigned on that,remember?), Neighborhood & Community Relations Dept., Civil Rights Dept., as well as the excessive number of managers in many departments. You can have a conversation about what to bring back if and when the economy recovers.

Adam says, "Now we need those who moved away to pay their fair share."

We already have that. It's called local government aid (or LGA). Because Minneapolis and St. Paul are the economic engines of the state, they pump tons of money to the state in the form of sales and income taxes. Also, as you correctly point out, both cities are heavily used by people who don't pay property taxes or fees back to the city. That's exactly why LGA was created.

LGA was a promise: Minneapolis and St. Paul would continue to pump income and sales taxes into the State's coffers, and in exchange the State would give a small fraction back in the form of LGA. The system worked great until Pawlenty broke that promise. The republican legislature continued to renege on that promise, drastically cutting LGA to the first class cities.

It's no surprise that Minneapolis and St. Paul will look to restore what they lost with taxes and fees.

A commuter tax sounds interesting and maybe promising. How is a commuter tax implemented? Parking tax? It would seem reasonable to levy a tax on parking in Minneapolis and St. Paul during work hours/days. All parking from 8 am to 5 or 6 pm, including parking garages/contract parking, could both increase revenue and decrease traffic during rush hour without impeding tourism-based revenue for shops and entertainment on evenings and weekends. It would also capture some additional revenue from sports fans coming to see a daytime Twins game.

As for police/fire pensions--what's done is done. It's not right to renege on that promise, whether the compensation was fair or not. Certainly there are cuts that can be made, but don't forget the cost of bringing things back "online" after you've neglected them. The cost savings of shutting down parks will probably be lost on removing graffiti and repairing neglected trails and equipment; the cost savings of shutting down Health Departments and Civil Rights Departments would likely be lost in litigation for neglecting government duties, since those duties are either legislated (Health Dept.) or constitutionally necessary (Civil Rights Dept.); the cost savings from shutting down the Community Relations Department would likely be lost in a loss of community growth/tax base, a decrease in spending/tax revenue in those communities, a decrease in privately funded development in those communities, and a potential increase in crime in those communities; jobs, jobs, jobs will be lost by closing down these "fluffs" which puts a further strain on the economy when the private sector is unwilling to produce the jobs, jobs, jobs that were supposed to be created by the incredible tax breaks it's been given; etc. Every one of those costs will come out of our pockets in some way, and probably quite a bit more painfully and unpredictably than a predictable tax.

At some point Minneapolis, St. Paul, Duluth and other "pay in" cities to LGA have to make the point.

I propose that for every dollar of reduced LGA, Minneapolis withhold a dollar of taxes payable to the state and use that revenue to plug the LGA hole.

No, it's not legal. But what if city leaders had the courage to threaten to do that? We could have an actual conversation about how LGA works, why we have it and the costs of eliminating it.

This is a worthwhile discussion for a lot of reasons, so I’ve been interested in the various responses, and there are numerous nuggets among them that strike me as having at least some validity.

I live on a pension that hasn’t seen an increase in 4 years. Adam’s idea to “revise” pensions so people get what they “need” as opposed to what they “deserve” (#5) strikes me as the sort of betrayal from which there’s no recovery. I’d guess Adam and I wouldn’t agree on what he “needs” versus what he thinks he “deserves,” nor would we agree on the reverse, so I can’t help but wonder how he’ll feel when whatever plan he makes for his own retirement – if the concept of “retirement” has any validity at all in a generation – is cut in half after he’s beyond the age where employers are likely to hire him for a living wage. I think his viewpoint will change over time.

I’ve only lived here (in MNPLS) 2 years. My home’s value has declined 25 percent, while taxes on it have gone up 13 percent. To phrase it gently, this is not a sustainable course.

And ultimately, that may be the bottom line for our society as a whole – we may well have built cities and lifestyles that simply are not sustainable – not only in the current, fashionable environmental sense, but also in the hard and practical nuts-and-bolts and dollars sense. An economy on a planet with finite resources cannot logically be based on perpetual growth. The planet cannot sustain an infinite number of human beings, no matter the squalor of their miserable existence after all the land is used up, the fish killed off, etc., in your favorite doomsday scenario. In essence, religious arguments against birth control are a death wish for humanity. Ironic when many who support those arguments purport to be "pro-life."

Less theological in some ways, but not in others, industrial capitalism may be about to self-destruct. Not, perhaps, in my lifetime or my childrens’, but somewhere down the road, we’ll have used up all the oil, mined all the iron ore, used the last of several other resources upon which the current economic system depends. The point being that industrial capitalism, to work in what we regard as the “proper” manner, is similarly based on a growth model that’s not sustainable, so repeated calls for “more jobs” may prove pointless as we run out of resources.

To bring it back to a more local level, one idea worth exploring, especially as urban-hating Republicans dominate the political landscape for the time being, is the “commuter tax” mentioned by Pat (#1) and Rachel (#7). This is an idea that’s been in place in St. Louis (and probably many other cities) for many years, where it’s called a “city earnings tax.” If you work in the city, your employer deducts from your pay check a small percentage (I’ve no idea what the actual numbers are now. I haven’t lived there in 15 years) which is used by the city as they suggest – to compensate and pay for infrastructure that’s used by people who work in the city, but whose homes are in the suburbs. Because urban-hating Republicans, ideologically paralyzed so that sensible ideas can’t be considered if they involve the word “tax,” dominate the political landscape, I’d be surprised if this gets off the ground any time soon, but it would be an effective way to at least in part address the current disparity between what the Twin Cities put into the state’s economy and what they get back from the state in return.

As several have pointed out, LGA was instituted, at least in part, to address that disparity, and while I wasn’t here during most of Mr. Pawlenty’s years as Governor, it does appear that the legislature, or perhaps more accurately, Minnesota Republicans, has / have essentially reneged on that contract. Unless a “race to the bottom” is truly the goal of the state’s Republican Party, maintaining the economic engine of the Twin Cities ought to be among the highest priorities of the state government at this point.

Quite frankly, I’m also on board with the notion of annexation. If Minneapolis and St. Paul were to annex their respective first-tier suburbs, much redundancy of services could be eliminated without loss of quality, and the tax base of both cities significantly expanded. Annexation, of course, requires the consent of the annexed, and, given “takings” case law, not to mention the various prejudices of many a suburban-dweller, it’s a useful idea that will likely never be put into practice.

Even with annexation and a city earnings tax, however, we’ve trapped ourselves into thinking that everyone should be entitled to what we think of as a middle-class lifestyle, and that may simply not be possible unless / until the national economy recovers from the stupidity of letting Wall Street regulate itself.

Reggie M (#6) is exactly right. LGA was a promise broken by Tim Pawlenty. It is now under the knife of far-right surgeons who plan to cut it away by 25% per year until it hits Zero in 2015.

The answer isn't to cut salaries or pensions or essential public services -- including parks and rec., library hours, arts events and and other so-called "amenities" that enhance our lives and build community.

I see two parts to a possible answer: First, the counties and states should not forward to the state all the property taxes collected, but should withhold the amounts needed to replace LGA as it would be without the Pawlenty cuts and the current ones. Is is our money, after all.

Secondly, throw the bums out in 2012. Refuse to vote for those politicians in the current majority who are so ideologically opposed to modest, progressive taxation that they would rather see our counties, cities, schools and the entire state disappear down the sinkhole that IS COMING if we refuse to maintain them.

Seventy-two percent of Americans want revenue to be increased by taxation on those most able to pay. It would make most of our current problems go away locally and nationally (except for those pesky wars, of course). Someone should tell the Republican Party.

Adam is correct. Until the unrealistic pension plans provided to government employees are negated and revised to mirror retirement plans offered in the private sector we will simply be kicking the can down the road. But this time the road is much shorter. The issue is simple; Defined benefit retirement plans currently offered to government employees are not economically sustainable. These plans are not found in the private sector for this reason. Defined contribution plans are the only option. If government budgets are to be revised, let the politicians and unions look in the mirror before they hold out their hands for more tax dollars.

The reason that fees are used to collect revenue for local government is that tax exempt properties still have to pay fees. Given the large amount of tax exempt properties owned by the state in Saint Paul, it makes sense to charge fees for street lighting, solid waste programs, street repair, etc.

And in Pennsylvania, local governments and school districts benefit from a 1% wage tax that is paid by everyone who works in the locality and it makes no difference if you live in the locality or outside of the locality. Philadelphia which borders on both New Jersey and Delaware clearing benefits from this as do other cities along the borders of the state.

Think about a 1% wage tax split between Saint Paul and Saint Paul Public Schools and funded in part by everyone who lives outside of Saint Paul and works in the City. I bet that the amount would exceed the LGA amounts to the City. Same holds true for Minneapolis.

Rob Fulton

Require all city employees to live in the city and county employees to live within the county. We're paying salaries and benefits to people who choose to live elsewhere. Bring back the residency requirement.

Raising any taxes is the pits, but always feel much better when taxes I pay are closer to home. Sending money off to state or feds to spend is so often like flushing it down the toilet.