Forced to choose, communities raise taxes, cut jobs

Observation Park rink
An old and overgrown hockey rink near Observation Park in Duluth, Minn. could benefit from a proposed parks and libraries referendum on this year's ballot in Duluth. The referendum would create a special levy fund for parks and recreation while allowing the city to take general fund money previously allocated for parks and recreation and dedicate it to keeping branch libraries open five days a week and allowing the main library to operate at full capacity.
Derek Montgomery for MPR

Property taxes are going up, and many local government jobs are going away. As 2011 comes to an end, those are two main themes emerging from recent trends and decisions Minnesota's 3,200 cities, counties, townships and school districts have been making the past several months.

A majority of Minnesota's local governments have proposed to raise their property tax levies next year. Most of the rest proposed holding their tax levies flat, and because the state eliminated a tax relief program for homeowners, even a flat levy means a property tax hike in 2012. In total, the Department of Revenue estimates that local governments proposed $379 million in additional property tax revenue - an increase of 4.7 percent for property owners to bear.

That number is shrinking somewhat as local governments finalize their budgets at the end of the year, but on the other hand, it doesn't include the dozens of school levy increases that voters approved in districts around the state last month.

Property taxes have been creeping up in Minnesota for more than a decade, as the state has cut back its payments to local governments. In 1999, property taxes made up about 30 percent of state and local government revenue. Now it's up to about 40 percent.

"We see a regressive system, where those at the bottom of the income ladder pay a higher percentage of their income to state local taxes," Revenue Commissioner Myron Frans said.

At the same time, local governments have also been making cuts, specifically to their payrolls.

Just under 285,000 Minnesotans were working in local government jobs in November, 9,000 fewer than the year before, according to the Department of Employment and Economic Development

"That's the lowest we've seen since 1999, and about 16,000 below what it was at its peak in 2002," state labor market analyst Steve Hine said.

In conjunction with job elimination, many local governments have cut back on library hours, reduced park budgets and delayed road repairs since the start of the Great Recession.

Those budgets continued to shrink this year, but cities also looked for cuts in areas they previously had held harmless.

"Public safety services are among the last to be affected, but that's where we are now," said Jim Miller, executive director of the League of Minnesota Cities.

Sixty Minnesota cities have closed their police departments over the past decade, according to the Minnesota Board of Peace Officer Standards and Training. Many of them signed contracts with their county sheriffs to provide coverage instead. But in some cities even that level of service has become too expensive.

Public safety spending is the biggest line item in most city budgets, and advocates for redesigning government say communities need to find more efficient ways to provide that service.

Jim Mulder, who used to run the Association of Minnesota Counties and was the Independence Party candidate for lieutenant governor last year, is now a consultant living in Roseville, and he said he can quantify the inefficiency by counting squad cars that drive through an intersection near his home.

"You could see the St. Paul Police Department, the Maplewood Police Department, the Roseville Police Department, the Highway Patrol, the county sheriff and a couple park sheriffs, and I think even the transit authority police department go by." Mulder said. "That doesn't seem to make a lot of sense to me."

Mulder predicts tighter budgets will eventually force local governments to re-think the way they provide all kinds of services. While austerity has brought painful cuts and tax increases, he says it may also bring about important reforms.

You can find more about the choices Minnesota communities have been making by visiting MPR News' Forced to Choose page.

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