During his final budget address today, Mayor R.T. Rybak announced a $1.1 billion budget that includes a proposed one percent reduction in the city's property tax levy - the first in 20 years.
The crowd at Thrivent Financial exploded as Rybak announced his property tax proposal. The proposed reduction follows more than a decade of tax hikes. During Rybak's three terms as mayor, the city's property tax levy nearly doubled to more than $280 million. The city held the levy flat as recently as two years ago, but Rybak said an actual cut is almost unheard of.
"Over the past 24 hours, as we were putting the final stage of the budget together," Rybak said, "one of the toughest questions for the budget office to answer was, 'When was the last time we lowered property taxes in Minneapolis?' "It's a long, long time ago."
Hennepin County tax records show the last time Minneapolis cut its tax levy was in 1994. Rybak said three factors made the reduction possible.
The city has $7 million left over from last year's budget. Also, as part of the Vikings stadium bill passed last year, the city doesn't have to use property tax money to subsidize the Target Center. Instead, it can use $5 million in sales taxes to do so.
But the most important change was a $10 million dollar increase in state aid, made possible when Democrats regained control of the state Legislature. It was the first boost the city has received since 2009.
"Minneapolis, which is Minnesota's economic engine, is back in partnership with the state of Minnesota," Rybak said. "Thank you Governor [Dayton]. Thank you Legislature. You invest in Minneapolis, Minneapolis will pay back even greater for the state of Minnesota. So thank you for that."
“One of the toughest questions for the budget office to answer was, 'When was the last time we lowered property taxes in Minneapolis? ...It's a long, long time ago.”Mayor R.T. Rybak
The tax cut amounts to less than $3 million. Combined, the leftover funds from last year, the increase in local government aid and savings made possible by the Vikings bill goodies add up to about $22 million.
Some of that money is needed to make up for inflation. Rybak said city costs are rising faster than expected, but he isn't proposing any layoffs or other spending cuts.
The budget proposal also contains new spending, including $4 million to train new police and firefighter recruits made necessary by a wave of expected retirements. Sixty percent of the city's firefighters and more than forty percent of its police will be eligible to retire over the next decade.
Rybak also wants to add new psychological screening for police recruits and put the entire department through "cultural competency" training. The proposal is a response to recent racially charged incidents involving Minneapolis police officers off duty in Apple Valley and Green Bay. Rybak said the city has zero tolerance for racism.
"When one person makes one comment on duty or off duty, it jeopardizes every single bridge that we have built," he said.
While the mayor gets to propose a budget, the Minneapolis City Council has most of the power under the city's weak mayor system. Council President Barbara Johnson said she likes what she heard -- especially the tax cut.
"That will be good news to a lot of Minneapolis residents, because people are really feeling pressured with these property taxes," she said. "You know, I talked to people over the years. We've been involved in foreclosures in North Minneapolis. And one of the items impacting people's house payments is their property tax, and that kept going up."
Even though the city didn't cut its levy this year, many city homeowners still received a tax break, because housing values declined relative to commercial, industrial and rental properties. Johnson has no quibbles with Rybak's other proposals, but Council Member Gary Schiff does, particularly the mayor's plan to have some city workers in the office on Saturdays so that residents can call then.
Schiff questions whether that convenience is worth the $250,000 cost.
"Are people just calling on Saturday for what they actually called Monday morning for?" Schiff asked. "Or are you actually providing more of a service to property owners? We have to make sure this is something that's really worthwhile to spend."
If not, Schiff said, it's possible the city could make its first tax cut in 20 years a little larger.