The Mayor Blog

We heard you. You asked City Council Members and me to take action to help keep down the increase in your property taxes next year — and this week, we took the first step. Now I’m asking for your help in making sure we get it done all the way.

On Wednesday, the City Council’s Ways and Means Committee approved a package that Ways and Means Chair Betsy Hodges, Council President Barbara Johnson and I proposed to cut the City’s portion of next year’s property-tax increase from the 7.5% that was reflected on the Truth in Taxation Statements that you received last month down to 4.7%.

We took some short-term and some longer-term actions to keep down increases in taxes. In the short term, we cut an additional $6.1 million out of next year’s budget, primarily by cutting or delaying debt payments or payments to other levels of government. But because some of those cuts will reap only one-time savings that won’t help us next year, we also took some cost-saving measures that are intended to help save taxpayers money in 2012, 2013 and beyond: we are budgeting for no wage increases for City employees for two years, and we capped non-personnel spending in the old Neighborhood Revitalization Program while assuring funding for ongoing neighborhood programs.

Even with these cuts, most residents’ taxes will still go up next year, in some cases by wide margins. This is because many of the factors that are influencing how much you will pay next year — skyrocketing obligations to closed pension funds that the City does not control, tens of millions in State cuts to Local Government Aid, the balance between commercial and residential property values, and the recertification of a special taxing district, not to mention the state of the economy — are out of the City’s direct control.

Even so, we heard you when you told us that we needed to try everything we could to find savings, cut the tax increase and ask everyone to share some sacrifice.

We take spending your money very seriously and we’ve worked to restore and maintain fiscal responsibility at the City. Over the last nine years, we have:

• Delivered structurally balanced budgets that have matched spending to revenue not just one year at a time, but five years out;
• Paid down $130 million in debt;
• Restored the City’s top AAA credit rating with all three national ratings agencies;
• Reduced the size of government — after adjusting for inflation, we will spend 7% less in 2011 than the City spent 10 years ago and will have 1,000 fewer full-time positions than it did 10 years ago.

Your advice and guidance through this period has been invaluable, and we have listened to every word you’ve had to say. Now I’m asking for your help again.

The City Council will vote next Monday evening on this reduction package when it votes to approve the entire budget. I encourage you to contact your Council Member to let him or her know where you stand on these choices and support our efforts to limit the increase in property taxes. Or just come and comment in person at the Council meeting starting at 6:00 pm Monday in City Hall.

Thank you again for your partnership.

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On Wednesday, the Minneapolis City Council Ways and Means Committee approved a set of amendments to the proposed 2011 City budget to provide tax relief to Minneapolis property owners, while balancing City leaders’ commitment to strong neighborhoods.

Minneapolis City leaders have been committed to investing in neighborhood revitalization, recognizing that the work done by neighborhoods is instrumental in strengthening our communities and providing a unique quality of life to our residents. However, the City faces tremendous budget challenges due to the downturn in the economy, skyrocketing pension obligations and $54 million dollars in cuts passed onto the City by the State in the past three years alone.

These factors have resulted in property tax increases in neighborhoods across Minneapolis, with many seeing double-digit property tax increases for 2011. Given this grim reality, Mayor R.T. Rybak and City Council Members collectively felt it was critical to find some measure of property tax relief on behalf of property owners.

The plan continues to provide funding for neighborhood organizations, while lowering the 2011 property tax levy, from the 6.5 percent maximum increase that taxpayers saw on their Truth in Taxation statement in November to a 4.7 percent increase. The plan, unanimously approved by the Council’s Ways and Means Committee, led by Council Member Betsy Hodges, takes a number of steps to cut costs within the City. In addition to those cuts, changes are proposed to the way neighborhood groups are funded.

The action:

• Calls for the City to seek legislation at the state level consolidating neighborhood programs and eliminating the need for the Joint Powers Board (NRP Policy Board).
• Directs the Finance and Neighborhood and Community Relations departments to allow neighborhoods to contract up to 50 percent of their NRP Phase II allocations. Neighborhoods that have contracted more than 50% of their Phase II funds will not be able to execute additional contracts.
• Calls for the Neighborhood and Community Relations Department, working with the Neighborhood and Community Engagement Commission, to report back to the City Council by March 1, 2011 on how programs will be implemented moving forward, with an emphasis on mitigating equity issues among neighborhoods related to the suspension of new contracts.
• Directs the City’s Finance Department to report back by Feb. 1, 2011 with a plan to provide property tax relief in 2012 and 2013 by capturing only 50 percent of the value of the properties in the consolidated Tax Increment Financing district that provides, in part, funding to neighborhood organizations.
• Directs Finance to report on possible impacts to Target Center funding, which is also tied to the Tax Increment Financing district. The Finance Department will also identify other options for property tax relief for 2012 and 2013 if the legislature does not provide the City with the authority to consolidate neighborhood programs.

To learn more about the cuts from the state, skyrocketing pension obligations, and the details on property tax increases in the city, visit www.ci.minneapolis.mn.us/city-budget/truth-in-taxation.asp.

This action will be considered as part of the overall budget by the City Council at 6:05 on Monday, Dec. 13, prior to the adoption of a budget for 2011. The meeting is held in City Council Chambers, room 317 of City Hall.

There are several important facts to note.

• First, this action does not affect any current contracts. Existing NRP/City contracts will be honored.  
• This action also does not affect any NRP Phase I allocations, whether contracted or not.
• Finally, the action does not affect future funding of neighborhood organizations anticipated from the Consolidated Tax Increment Finance District for 2011. Today, the City Council approved the Community Participation Program and these funds will be available to neighborhood organizations starting Jan 1, 2011.

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