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Minneapolis homeowners: Let’s talk about those proposed property tax hikes -- whoa!

Here's the tax surprise one Minneapolis homeowner found in his mailbox.
Here's the tax surprise one Minneapolis homeowner found in his mailbox.

If you own a home in Minneapolis you’ve probably seen your proposed property tax for 2011—the statements started arriving in mailboxes this week. And if you saw an increase, it was probably in the double digits.

“It kind of clears the sinuses,” says Carol Becker, president of the Minneapolis Board Estimate and Taxation. She voted against the proposed increases, which for her home will be 17 percent if the increases are approved.

There’s a public hearing on the increases at 6:05 tonight at City Hall in Minneapolis. I asked Becker what she’s expecting: “I’m hoping a lot of people will be angry.”

Are you a Minneapolis homeowner? Are you angry, or is it a burden you’re glad to carry? Will you be at the hearing tonight? What do you want to communicate to the city? I’d love to get your thoughts in the comments.

Just as striking as the double-digit tax hikes is just how much the burden has shifted over the years from commercial and industrial property owners to homeowners.

Here’s how the property tax burden was divvied up in 1997:

And here’s how it will look in 2011, according to the proposed increases:

Notice what happened? Residential and commercial/industrial flipped. This isn’t just the work of the Minneapolis Board of Estimate and Taxation; it’s the work of Minnesota lawmakers, who have played a key role in slicing up that pie.

There is also the issue of Local Government Aid — the money the State of Minnesota provides to local governments each year. In 2003, that money accounted for 40 percent of General Fund revenue in Minneapolis, with property tax payers covering 22 percent. That number has also flipped in 2011. In the last three years alone, Local Government Aid to Minneapolis has been cut by $54 million, according to the city.

So what exactly are Minneapolis property tax payers paying more for? One word: pensions.

The proposed 2010 to 2011 increase in property tax money going to fund the city’s pension plan — decimated by the Stock Market crash—is a jaw-dropping 48%. That’s a $7 million jump from $15.5 million to $23 million.

Homeowners and other property tax payers will also be funding a $2 million increase for the Park Board and a $1.4 million increase overall for libraries, the Public Housing Authority and a teachers’ retirement fund.

All told, Minneapolis property owners will be paying  $17.5 million more than they paid last year if all goes as planned.

In a document provided with the property tax notice, the City of Minneapolis issues a pre-emptive strike against any charges of irresponsible spending:

“Over the last 10 years, City spending has declined: after adjusting for inflation, the City’s proposed budget for 2011 is 7 percent smaller than the City’s budget in 2001 and the City will have fewer full-time employees in 2011 than at any point in the last 10 years.”

The increases are not city tax expenses alone. Some Minneapolis property owners might also be paying as much as a double-digit increase to the school district and to Hennepin County. But it’s the city hikes people will be talking about at the hearing tonight.

Got something to say about all of this? Here’s where you need to be tonight:

Minneapolis City Hall

Room 317

6:05 p.m.

See you there or in the comments below!

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Comments (24)

17%!! - It is for the children!

In reality, the increase is for the “special interests” who are big donors to the DFL.

My tax went up 12% AND the value of my home dropped. Um. Okay then.

Won't be there (2 kids make some forms of civic duty too onerous for now), but I expected the increase (17% for us). Drops in LGA, pension funds that are required to be met, and a high level of service all pointed to this coming. I am in general fine with property taxes, in that those in expensive houses can usually well afford them, but I do worry about those who are on fixed incomes, living in homes purchased decades ago, who now see tax bills eroding into their inflexible budgets. Will be interesting to see what happens under the new legislature.

The citizens of Minneapolis are in control of their own government, they elect the people that decide and budgetary priorities.

Democratic, local control in action....enjoy!

My home value dropped 5% and my proposed property tax increase is 19.8%? Pensions...I wish I had someone to cover my losses in the market.

Almost Mr. Swift
Can you say Twins stadium bonding bill and Pawlenty.
As for the pensions tied to the wall street gambling machine, the Mpls voter is far removed from the management decisions that led to the pension investments being put into the wallstreet casino in the first place.

//Pensions...I wish I had someone to cover my losses in the market.

You mean you wish you had a pension.

I got my 17%+ increase notice yesterday. Last night, I figured out that my property taxes are now roughly equal to the entire food budget for my wife and myself. I'm on Social Security, so that's not going up. My wife, who is a few years younger than I am, is also a type-1 diabetic (for 32 years), so you can just imagine what our medical insurance and co-pays come to (roughly 3 times our food bill for the premiums alone). I understand that those "closed pensions" for the firefighters and police officers were more or less risky investments for years, and now the city is on the hook for the difference.

At this point, I am gardening every spare inch of my yard and learning about which weeds are edible, trying to drop my food budget down as close to zero as I can. But what happens when the property tax gets to double and my social security stays the same? Even if I dumpster-dive, how will I pay for a phone, or electricity, or medicine, or the water bill.

It wouldn't bother me at all if I could depend on the government for services, but I can't. Bad roads mean car and tire repairs. Closed fire stations mean that I may not get emergency services in time to save my life. And the lack of single-payer healthcare means that I just may not get even the most minimum care when I need it the most. All of this is happening as Hennepin County builds luxury hotel rooms for a private company at the Mall of America, as Minneapolis plans on hosting a multi-million dollar Democratic National Convention in 2012 (which would benefit primarily hotel owners and hookers, while the rest of us get tear gas), while Minnesota considers a $900 million dollar (should we just say "billion"?) stadium for the Vikings.

Something is very wrong with this picture.

I was astounded as I received my proposed tax notice in the mail today -- a 16.2% increase. Based on some of the other comments, I may be lucky that it wasn't higher.
Not really getting over the shock until a short while ago, I discover that the meeting to comment on this increase was earlier this evening. Nothing like a little notice!
I understand all of the pressures that government is under -- but it is beyond me to understand how the generous pension programs established over the past 40 years suddenly become the primary obligation of this generation of property owner.

I bet it's time to elect people who can zero expenses and make real decisions to fund real programs and services. I remember when I lived in South Minneapolis when budgets were tight. The Powers That Be closed wading pools and other park services. These were the most visible public services and they decried the boogeyman of the moment. Pawlenty,selfish suburbanites, etc. Look to your politicians and their buddies and drag on the budget of your making.

I'm glad we're having this discussion. The graphs above say it all.... and at some point we have to have a state- (and nation) wide discussion about how we are going to pay for what we need to live. Our taxes have to go up if we want to continue funding schools, fire and emergency service, clean air, safe food. There's no getting around it. Calling it a fee doesn't make it any less of a bill to be paid at the end of the month. At least Mpls has the courage to be honest about what it's going to cost and why, unlike our "it's not a tax, it's a fee" governor.

Our property taxes went up 17.8 percent. We have a new republican house and senate, and I will be very interested to watch what they do now that they have to answer for the things they say they want to do (and not do... say goodbye to high speed rail and its hundreds of jobs).
I suspect much of the tea party bluster will fade as they grapple with the shock of actually having to govern. Much easier to rail against abortion and gay marriage than to figure out how to keep people off the streets or living out of their cars. I foresee much cultural meddling, and little real relief.

Think of the bright side. Mayor Rybak gave us some really purddy water fountains after his wife told him they were a swell idea!

It's bad enough that I'm paying more for my house than it's worth - I bought at the wrong time, my fault, I can accept that. But the fact that I keep having to pay more, while city services and the neighborhood around me continually deteriorate, really makes me wonder if it wouldn't be better to cut my losses and walk away.

After reading all this, I feel conspicuous stating that my property tax increase was only a tepid 10.2%. My homestead valuation decreased by 5%.

As we must bear are own losses in the market, stack on those losses in the pension funds of government workers. Yet another bailout financed by tapped-out taxpayers.

Over the past twenty years of receiving these property tax statements, I have developed the expectation that my taxes will always increase, even in the years that my valuation decreases. The only year I was angered was 1992, when my property tax increased 85%.

Ha-ha my property taxes only increased 4.4%! Lucky for me the last round of foreclosures decreased my property value 14.65% in last year.

As for the pension argument, what was the bounce back from two years ago? I would believe 48% down in 2008, but any good investment manager should have gotten back to near flat by now. I would investigate how these funds are being invested.

I believe I read somewhere that, as far as corporate taxes go, it's not the income tax rate where they give substantial dollars to the state, it's the property tax rate. So if corporate property taxes are so much higher than income taxes, and corporations are paying a much smaller share of property tax dollars... that doesn't seem right.

Does anyone know why the the tax burden has shifted from commercial and industrial property owners to homeowners? Less business? More homeowners? Just a legislative whim?

I have a two-word answer to your question, Karen: Class warfare.

There’s no free lunch, so if we want all the services and programs we say we want, we have to pay for them. I recall one of the commentators a week or two back suggesting – accurately, I think – “We don’t want to pay for what we want.” There aren’t many city-wide services that aren’t expensive, and while it’s easy to decry the expense of someone else’s pension, I’m well aware that my current income is entirely through the labor of others who are still working, and it seems reasonable to me that they should be able to live in at least modest comfort when they retire, just as I have.

That presumes, of course, that “retirement” has not already become a completely outmoded concept except for the very wealthy, who may be the only ones who can afford to stop going to the office when they reach a certain age. Your typical landscape employee isn’t likely to be in that financial position, or your typical cable installer, or auto mechanic, etc. Perhaps we’ll revert to the “good old days” that Mr. Swift has such seeming fondness for, and simply work until we can no longer do so physically. At that point, we can follow the Congressman’s advice in reference to Republican health care plans and “die quickly,” or throw ourselves on the mercy of our families. Living in closer proximity to family members may be more important in the future as a result.

Like others, my modest home’s value declined – by 5% – and my potential tax bill went up – by 13.2%. For the moment, I can afford it, though the logic of higher taxes on lower property value escapes me. I should add that, even if the city had no control over the timing of the arrival of notices and the hearing at city hall, someone there surely was aware that notices would be arriving this week. If nothing else, the consistent refrain from the hearing that people attended on short notice ought to suggest to the powers-that-be at city hall that some rethinking may be necessary.

One of the things we should all be paying attention to are those pie charts. How – and equally important, WHY – have the proportions paid by residential and commercial property taxes reversed themselves? What laws have contributed to this transformation? Do we really want to finance local, county and state government through residential property taxes? If not, moving back toward the proportions in the 1997 chart may be in order. Think about this, Republicans, the next time your Republican legislator suggests more tax breaks for businesses. I’d like to see more research on this, related to the oft-claimed notion that businesses in Minnesota have to deal with an undue tax burden.

My residential property taxes in Colorado in 2008 were 77 cents per square foot. The tax bill I just received has me paying $1.04 per square foot. Add that 25 percent difference in property taxes to state income taxes that are three times as high here as they are in Colorado, and the suggestion that this is a “high-tax state” is hard to deny.

If the current budget crunch demands some belt-tightening, holding a badly-timed public hearing at city hall is the 19th-century way of getting minimal feedback. It’s fine if minimal feedback is what public officials want. If, however, they want something besides a litany of complaints from the public, technology and organization should be put into place so that a genuine public process occurs. “We have a budget problem that looks like it will last for ‘x’ years. Here’s our income, current and projected. Here are our expenses, current and projected, with a list of the facilities and programs the city now provides, and the budgeted cost for each. Each item on the list also has a description of what eliminating that facility or program will mean in terms of service, and what it will save the city in dollars. Where do you think we should cut back on services and programs, and for how long?”

Feedback from thousands of households on those questions would be hard to ignore.

My husband and I purchased our house in Seward neighborhood in 2004. At the time, our homesteaded tax (payable 2004) was $4770.46. The proposed tax (payable 2011) is $8138.95, an 11.3% increase from payable 2010. Amazingly, the assessed value of our property has declined by $21,500. We are the people you want to live in the city; however, if property taxes continue to increase at this rate, we will be unable to afford to live here and will make the choice to leave.

This afternoon I heard on the radio the statement that the increases for Minneapolis are necessitated by pension costs. I would love to know what sorts of retirement pensions and benefits city and county employees receive especially if these costs are driving property tax increases for all of us.

Given the problem with LGA funding is an ongoing reality, that people are stretched to their limits already and feeling considerable financial pain and anxiety, perhaps it is time to reassess 1)the costs of city and county government and 2)the benefits offered to city and county employees upon retirement (especially free or subsidized health insurance).

Think of the bright side. Mayor Rybak gave us some really purddy water fountains after his wife told him they were a swell idea!

I used to print the Truth-in
taxation notices before I err! ahh! retired (from Hennepin County) It been a few years but the preliminary data was available a few weeks before the elections. Perhaps not in term of individual property compilations but by general types (IE: Minneapolis homeowner can expect a 16% t0 18% total increase). In the past years I recall newspapers stories run before the election. We used to joke that they really needed to mail these out before the elections.

A poster said that the law states that these must be mailed between November 10 and November 25. That sound right. In theory no public hearing should be held until after these are mailed out.

The pension system is very complex but Minneapolis used it own pension investing which had a very low return versus MNPERA, which Hennepin County uses.

For a while, Minneapolis lost it's "all top" bond (credit) rating. I hate to say good things about Mayor "water fountain" Rybak but he has been working down the Minneapolis debt. Bond houses look at the pension liabilities. Minneapolis has regained it's "all top" credit/bond ratings. This is rare for large cities. On a practical level it means lower interest rated for Minneapolis.

A decade or two back Minneapolis and a lot of other municipal pensions tried using pension investment divestiture as a "social engineering" tool. (IE: divest tobacco stocks). MN PERA staunchly refused to do this had an investment rate of return more than twice as high as as funds with divestitures.

We are told we cannot invest our social security money in the stock market, yet the government is allowed to do so with their pension funds. Does this not scream of hypocrisy?