Hodges proposes 5.5-percent levy increase in 2018

A more detailed budget will be released in September

Mayor Betsy Hodges’ 2018 budget proposal includes a 5.5-percent increase in the city’s property tax levy that she said was needed to fulfill the city’s commitment to an agreement with the Minneapolis Park and Recreation Board to fund street and park improvements.

Hodges said the increase would “continue to fully fund” the 20-year, $800-million deal struck with the Park Board in 2016. It is expected to produce $22 million for street repairs and $11 million for parks improvements annually.

Hodges proposed a 5.5-percent increase last year, as well. She also delivered her budget address in August but is planning this year on a September address, when she will also deliver a more complete budget proposal, she wrote in her letter to the City Council and the Board of Estimate and Taxation.

“As a city, we have experienced two major public-safety incidents in recent weeks that have required a great deal of my attention, as well as that of many of you,” Hodges wrote. “This is time that I would have spent crafting my full 2018 budget proposal and preparing my budget speech.”

Hodges said she has asked acting Police Chief Medaria Arradondo to submit his ideas for the Minneapolis Police Department budget. Arradondo is nominated to permanently take over the chief’s role, which he assumed when former Chief Janeé Harteau resigned June 21 in the wake of an officer-involved shooting.

“I want (Arradondo) to have the tools and resources he needs to succeed as soon as possible, and do not want him to have to wait a full year before he can have an impact on the MPD budget,” Hodges wrote.

She said delaying the budget address one month has precedent. Full budgets were delivered in September following the August 2007 collapse of the Interstate 35-W bridge and in 2011, after a summer that included a tornado in North Minneapolis and a state government shutdown.

Hodges said property taxes are rising faster than inflation in part because city revenues from licenses, permits and fines and the municipal parking fund are flat. The city continues to advocate for an increase in state funding through Local Government Aid.

A growing tax base is expected to blunt the impact of a rising levy. The Assessor’s Office projects the tax base will expand 8.7 percent, with new building construction adding nearly $750 million in taxable property.

Hodges notes in her letter that property values are increasing, adding that their rising value reflects “well-balanced growth in our economy.”

“Yet we must also be mindful that the value increases are putting pressures on rents and homeowner expenses,” she wrote.

Hodges’ proposed budget would increase the city’s portion of the annual property tax bill on a home valued at $225,500 to $1,302 from $1,221, an increase of $81 or 6.6 percent. City property taxes on $310,500 home would rise to $1,811 from $1,767, an increase of $110 or 6.2 percent.

Hodges described the city’s fiscal health as “strong,” but outlined several trends that are putting pressure on the budget. In addition to increasing housing costs, those include reduced spending by the state and federal governments, rising expectations for improvements to the city’s police department, an aging population and the need to address “persistent racial inequities” among Minneapolis residents.

Based on Hodges’ proposal, the city budget is expected to increase 5.4 percent to just over $1.4 billion in 2018 from about $1.33 billion this year.

Click here to read the mayor’s budget message. Hodges’ budget address is scheduled for noon on Sept. 12.