Minneapolis levy debate reveals fault lines among council members

MinnPost photo by Peter Callaghan
Proposed by Council Member Linea Palmisano, fourth from left, the complex amendment to reduce the levy carried thanks to the votes of veteran council members Kevin Reich, Lisa Goodman and Council President Barbara Johnson, along with those of new council members Blong Yang, Jacob Frey and Abdi Warsame.

A coalition of Minneapolis city council veterans and new members succeeded in doing something unusual earlier this week: they cut Mayor Betsy Hodges’ proposed budget.

It wasn’t to fund different programs, but rather to reduce the size of the property tax levy. The changes, passed despite a no vote from the council’s budget chairman — and despite a last-minute appearance at the budget subcommittee meeting by Hodges herself — would allow for a decrease in the levy from the 2.4 percent requested by the mayor down to 2.2 percent.

Proposed by Council Member Linea Palmisano, the complex amendment to reduce the levy carried thanks to the votes of veteran council members Kevin Reich, Lisa Goodman and Council President Barbara Johnson, along with those of new council members Blong Yang, Jacob Frey and Abdi Warsame. 

But it wasn’t so much the levy change that was remarkable, to the point that it drew Hodges from her office, where she had been monitoring the debate. It was the way the council went about doing it: Several of the mayor’s key initiatives had been threatened, including the method by which she was planning to fulfill a campaign promise to address the city’s racial inequities.

And though there wasn’t a lot of money at stake with the levy move ($870,000 in a $1.2 billion budget), it revealed something important: that a city council sometimes viewed as politically monolithic — the current makeup includes 12 DFL members and one Green Party member — may actually cover more of a spectrum than it appears. 

‘Ultimately, all of the money is the same’

“The biggest thing I’ve heard from our taxpayers, across the city and not just in my ward is that the full amount of property taxes can be unwieldy,” said Palmisano, who represents Ward 13, covering far southwest Minneapolis. She said her ward is near suburbs that have lower property tax levies. And her ward also has some of the fastest growth in home values, the types of properties that are seeing tax bill increases while other areas have enjoyed declines.

“I can’t tell you how many people have literally moved across the street because of how many less property taxes they will have to pay,” Palmisano said. “And I want to keep them in.”

But what might have been interpreted solely as a way to save taxes for wealthier residents at the expense of programs focused on poorer ones was contradicted by Palmisano’s allies in the move to cut the levy: Johnson, Yang, and Warsame, who collectively represent many of the city’s lowest-income neighborhoods.

Palmisano also had the backing of council veterans who came to her defense against a litany of criticisms from those opposed to the move — suggestions that it was naive, that it confused on-going spending with one-time purchases, that a lower levy for this budget could create revenue holes next time.  

“Ultimately, all of the money is the same … whether it’s one-time or levy induced, it’s money sitting in a big pot and we can determine how it’s going to be spent,” said Goodman, who noted that the proposed amendment doesn’t contain budget cuts to any existing programs; it simply reduces requests by the mayor for new spending.

Backers of the mayor’s proposal made the case that the levy size is reasonable, and is needed to pay for basic services and important new efforts. Council Member Lisa Bender noted that fully one-half of city residents will see their tax bills reduced because their home values have increased less than citywide averages, and that the mayor’s budget would allow the council to “put its money where its mouth is” on issues like equity and the environment.

And, as Ways and Means Committee Chairman John Quincy pointed out, the cut would be so small that it would hardly create a windfall for most taxpayers: “This particular proposal just does not go to a point where it makes a significant impact on individual residents,” he said. As it passed, the savings were about $2.50 for the median-priced home ($180,000), leading to it being derisively labeled the #lattelevy on social media.

Differences emerging over how best to deal with equity issues

The debate also demonstrated differences in approach to what all members seem to agree on — that historic gaps in education, economics and health between whites and racial minorities are no longer tolerable, reopening a debate from two weeks earlier about the on-the-ground impact of the proposed war on inequity.

Back then, the topic was the city’s application for federal Promise Zone status for North Minneapolis, which some council members dubbed an exercise in talking rather than doing. This week, the touch point was the mayor’s proposal to create an Office of Equitable Outcomes, which would include two new hires and money for a Civil Rights Disparity Study.

“It’s very easy to sound sexy, to unload a bunch of fancy terms like ‘layering,’ ‘holistic’ and ‘collaboration’ without an end result,” said Frey, who supported the Palmisano levy cut. Instead, as he later proposed, he would increase money for the city’s Housing Trust Fund to help build affordable housing throughout the city, a move he thinks will help desegregate the city. He called it the difference between talking progressive and acting progressive.

Well into the committee meeting, Hodges took her seat on the council dais to defend the Office of Equitable Outcomes — and her budget plan in general.

“It was a year ago that many of us were elected on a platform of getting this work done, and it was almost a year ago when we all got together to set goals,” Hodges said in asking members to support two jobs in the equitable outcomes office rather than the one in Palmisano’s plan.

Mayor Hodges
MinnPost photo by Peter Callaghan
Several of Mayor Hodges’ key initiatives had been threatened, drawing her from her office into chambers, far right.

Eventually, Reich voted to preserve both of the positions for the Office of Equitable Outcomes. But then he also voted to reduce the mayor’s budget request and, at the same time, the tax levy reduction proposed by Palmisano.

Are there two parties in the single-party Minneapolis Council? With one exception, those supporting the mayor in the levy fight had also supported Council Vice President Elizabeth Glidden in her attempt last year to become council president. Those voting for the Palmisano amendment, meanwhile, were the same members who voted to retain Barbara Johnson as president. The exception was budget chair Quincy, who voted for Johnson as president but for the mayor’s budget Monday. 

A final vote will be held after a public hearing December 10. Amendments to what passed Monday can be made that night, including returning to the Hodges budget and levy. That’s what Council Member Cam Gordon pledged to do in a post-meeting blog post in order to restore $150,000 to staff a clean energy initiative that was cut. He might get a boost from news Wednesday that President Obama had named the city one of 16 “Climate Action Champions,” partly for its partnership with the energy companies to reduce greenhouse gases. 

But in the face of the majority vote Monday, Gordon wasn’t planning to find money via the #lattelevy. That fight was over. Instead, he wrote that he would seek to reduce added money for convention center promotion. 

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Comments (10)

  1. Submitted by Pat McGee on 12/04/2014 - 11:24 am.

    Property taxes and moving

    Please have Council member Linea Palmisano provide data to support her claim that people have “literally moved across the street” (to pay less property taxes). I would really like to know.

  2. Submitted by John Reinan on 12/04/2014 - 11:42 am.

    Palmisano’s statement is believable

    I live in Linden Hills, in Palmisano’s ward. When we moved there 12 years ago, we looked at a few homes in Morningside, just a few blocks away — but on the other side of France Avenue, in Edina. The property taxes on a comparable home in Morningside were about half of what they were in Minneapolis. So I find Palmisano’s claim completely believable — I don’t doubt there are people who move across France Avenue into Edina to pay lower taxes while still living in basically the same neighborhood.

    • Submitted by Ed Kohler on 12/06/2014 - 08:07 pm.

      Is Linden Hills losing population?

      @John, it seems like houses are being torn down by people moving into the neighborhood to build houses with higher property taxes. I base that on Palmisano’s tear down moratorium. So, while there may be people getting priced out of the neighborhood, it doesn’t appear to be a neighborhood struggling to attract residents interested in being near top-notch schools, the lakes, and a main street style business district.

  3. Submitted by Steve Carlson on 12/04/2014 - 12:08 pm.

    Blong Yang is the story here

    It makes sense Abdi would vote against Betsy’s agenda. He was put in office by the most unsavory elements of the DFL and has shown little regard for his ward since he was elected. With any luck he’ll be on his way out in the next election.

    Blong Yang, however, has no excuse. His lack of conviction is sad, and adversely affects his district. If he’s voting purely to spite the mayor (as it seems), he loses all my respect.

  4. Submitted by John Smith on 12/04/2014 - 12:09 pm.

    How about they plow and police

    Why do we elect city administrators that think they are more important then who they really are, along with then being distracted from the real job of running a city.

    Who cares about inequality in the city? There is nothing they can do about it. If anything it is a federal problem and a social problem. What is the council going to do, make parents get married? Entice people not to have kids if they can’t afford them? Make sure two parents are active in raising the children?

    The easiest way to solve the poverty problem is to get two parents in the home.

    The best way to keep poverty growing is to have faceless assistance given from DC that doesn’t address why people are poor but just keeps expanding the misery to more generations. But that isn’t bad cause then you have a class of people that always will dependent upon politicians.

    What they can do is make sure the alleys and roads are plowed, the garbage is picked up the streets are safe. Lower taxes and then maybe business will come back.

    Enough with these inane feel good warm fuzzy projects that just waste tax payer funds but sound good like sustainable global diversity equality education blah blah.

    You wonder why all the high incomes leave the city cause they pay more in taxes then a 10k sqft house on Minnetonka and the street isn’t plowed. But hey we have an world suitability study in PowerPoint that looks cool!

    As usual even on the local level politicians only care about staying in power and not actually solving problems.

  5. Submitted by Steve Titterud on 12/04/2014 - 12:14 pm.

    ‘layering,’ ‘holistic’ and ‘collaboration’ without an end result

    I’m with Jacob Frey on this one. He was kind enough to not call it air-headed nonsense.

    Another thing that’s irritating is the whole idea of a city department of OUTCOMES. Let’s call it the Minneapolis Department of Putting a Finger on the Scale, for a little more honesty in government.

  6. Submitted by Mike Downing on 12/04/2014 - 12:53 pm.

    Good article that raises issues

    Perhaps articles like this can help people question why property taxes are so high in Mpls and the services rendered so poor in relation to the neighboring cities around Mpls. The logical, rational & financially sound decision would be to move into a neighboring city. What is the value proposition for living in high taxed Mpls vs neighboring cities?

    • Submitted by Wayne Coppock on 12/05/2014 - 10:20 am.

      They’re higher in Minneapolis because people from all the surrounding suburbs come into the city, utilize its services, then leave and don’t pay for those services because they pay property tax to some suburb with lower costs. It’s the tragedy of the commons on a municipal level.

      Maybe we can put up toll booths at the city borders and entrances to parks, then charge people admission if they’re not Minneapolis residents. Or have the police verify residency before responding to a call. Oh, we can’t? Well this system kind of sucks, then. Basically the deck is stacked against a central city by the very basis of the municipal funding mechanisms in place and encourages a balkanization of competing fiefdoms instead of a metro area that works as one well-oiled economic machine.

  7. Submitted by Connie Sullivan on 12/05/2014 - 10:09 am.

    Minneapolis streets are better, at least than St. Paul’s. And Minneapolis takes better care of its streets than Hennepin County does (county roads in Minneapolis are dreadful, shameful, after last winter, with potholes never fixed).

    Minneapolis kept raising our property taxes in the Rybak years, to the tune of double digits year after year. I remember how St. Paul artificially kept its property taxes down during those years. Now, we and they can see, at least on streets, the difference of Our Taxes At Work.

    • Submitted by Wayne Coppock on 12/05/2014 - 10:23 am.

      Not only do county roads have maintenance issues, they have design issues as well. The county almost always refuses to prioritize anything other than traffic flow when designing streets, even in the middle of the city. Safety for other uses (pedestrians, bikes, etc.) is generally ignored or placed at the very bottom of their list of priorities. The city really needs to claw all its major roads back from county control and design them as actual *urban* mixed-use roads instead of mini-highways to ferry people from the suburbs through town faster.

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