City Council Passes Tax Increase, Neighborhood Funds Take Hit

In a session that lasted past midnight Monday, the Minneapolis City Council passed a $1.36 billion budget that increased the property tax levy 4.7 percent and found savings through cuts to Neighborhood Revitalization Program funds. It will also force the city to cut 36 fire employees and 24 police employees, according to council members.

During the evening's public hearing, a parade of 75 commenters spoke their piece–more than two-thirds asking for property tax relief. Many of the anti-tax speakers came from a rally an hour earlier, where protesters said property tax increases were driving the city into a "death spiral." The council, which approved the budget by a vote of 10-3, had considered raising property taxes as much as 6.5 percent.

"Papa" John Kolstad, an icon of the Minneapolis' folk music community who now runs a record label and owns property on Lake Street, said Minneapolis was starting to resemble 1970s Detroit because of the city's high taxes and low level of services. 

Tucker Gordon of Tangletown said he wasn't confident that city officials were listening to his protests after years of unsustainable tax increases. "If it's going to be like this, we just can't stay in city any longer," he told the council. This meeting has "got me motivated to get my house and put it on the market."

Other speakers were purely ideological. Nathan Atkins, a former Republican candidate for state House District 63A, said the council was ruining the city. He advised council members to "go pick up a book on Austrian economics."

Others spoke, in vain, against a council plan to slightly pay down property taxes by claiming some unused Neighborhood Revitalization Program funds. Some expressed concern that plan would harm the city's quality of life. 

Debbie Evans, a Linden Hills resident who sits on the NRP policy board, said the program leverages a huge amount of funding, especially in poorer neighborhoods, to pay for leaky roofs, housing loans and other "services that stabilize and improve our property tax base." 

The council's approved budget holds down property taxes by topping NRP allocations at 50 percent of the funding originally promised in the program's second phase, although the plan also provides some operating funds for neighborhood organizations through 2011. Some neighborhoods haven't even started spending the program's Phase Two funding, while other, typically more affluent neighborhoods, have completed both phases.

Jeff Skrenes, Hawthorne Neighborhood Council's housing director, said he wasn't defending NRP because it pays his salary, but because of the impact the money has on North Minneapolis. He described how the neighborhood group used NRP money to buy extra police time and demolish or board-up vacant houses.

Three failed amendments to the budget, proposed by Council Member Robert Lilligren, would have returned some portion of NRP funds to neighborhood groups. 

Minneapolis Mayor RT Rybak said he's "deeply sympathetic to equity issues," but that not providing property tax relief would make the city's financial situation more difficult in the long run. Next year, the city will also have to contend with posible Local Government Aid cuts from the newly Republican state legislature. We'll face the "exact same problem on steroids a year from now," he said of the 2012 budget.