Hodges: Minneapolis can spend more, keep property taxes in check

Minneapolis Mayor Betsy Hodges wants to hire more police, more building inspectors and more economic development officials. Her 2016 budget proposal includes millions of dollars in new spending on everything from affordable housing to public art.

But she says most homeowners won't see a property tax hike thanks to a booming downtown that's expanding the city's tax base.

Hodges proposed an increase of 3.4 percent in the city's property tax levy during her budget address on Wednesday. But thanks to all those cranes downtown — including a record $2 billion in construction last year — most homeowners won't feel the difference.

"Let me repeat, with this levy the city property taxes of nearly two-thirds of homeowners will go down," she said.

Why? Property taxes in Minnesota don't work like the taxes on sales or income. Rather than setting a tax rate, and seeing how much money rolls in, local governments decide how much money they want to collect, and that levy gets divided among all the property owners in the city.

The city is also drawing more revenue than expected from its local sales tax. At the same time, city departments have been spending less than expected in recent years.

That allowed Hodges to cut $750,000 in money that was being allocated every year but not spent.

City Council Budget Committee Chair John Quincy agrees with Hodges' approach.

"We don't feel the need to tax people now for something that's not needed," Quincy said. "That's why each of the department budgets were scrutinized for effectiveness. And there's a lot of unspent money, let's find a way to redeploy those resources."

The proposed $1.22 billion budget for 2016 includes a long list of ideas for spending the money. There's $10 million to go toward repairing the 10th Avenue bridge, and an extra $3 million for affordable housing.

Hodges wants to hire 10 building inspectors to keep up with all the construction and to keep on top of existing rental properties. The police department would get to add nine new positions, including two downtown beat cops, forensic scientists, crime analysts and video technicians to deal with all the footage gathered by the body cameras the department is buying.

The police department has suffered from a lack of civilian support staff ever since the Great Recession, Council President Barbara Johnson said.

"When we had the terrible budget cuts, that was one of the places that we absolutely took the meat cleaver to," she said. "That harms the ability to be out on the street working with people."

Johnson likes the new spending Hodges highlighted in her budget speech. And that's significant. Hodges' budget proposal last year ran into trouble with a bitterly divided City Council. Johnson was part of a narrow majority that scaled back the mayor's proposed spending increases. She doesn't see that repeating itself.

"I think we're going to have a better budget year this year," she said.

The council will pore over the proposal in a series of 26 hearings, beginning next month. The final vote comes in December.