Homeowners Face Gut-Punch: Minneapolis Faces Potential Record Property Tax INCREASE!
Minneapolis homeowners may be in for a brutal financial gut-punch as Mayor Frey unleashes the biggest property tax hike in over a decade. 🌐 #News #MinneapolisMN #Minnesota #Government
MINNEAPOLIS, MN – Minneapolis Mayor Jacob Frey has proposed an 8.1% increase in the city’s property tax levy for the upcoming year, marking the largest hike since at least 2008. This proposal, revealed on Wednesday, could result in an additional $200 in property taxes for the average homeowner in the city.
Impact on Homeowners
The proposed increase comes at a time when downtown Minneapolis commercial property values have declined. This shift means that homeowners are expected to shoulder a larger portion of the city’s property tax burden this year.
Budget Challenges and Rising Costs
The city is facing several financial challenges, with inflationary pressures and rising salaries adding to the overall costs.
Additionally, federal pandemic relief funds, which have helped cushion the budget in recent years, are set to expire at the end of this year. This has created a need for new revenue sources to cover the shortfall.
Moreover, the city must allocate funds to hire additional staff and invest in infrastructure upgrades required by court-ordered police reforms. These reforms are a significant component of the city’s budgetary planning for the upcoming year.
Revitalization Efforts for Downtown
Mayor Frey’s budget proposal also includes efforts to rejuvenate downtown Minneapolis. Plans include upgrades to Nicollet Mall and continued work on filling vacant storefronts. These initiatives are aimed at reactivating the downtown area, which has seen a decline in commercial activity.
In addition to these efforts, the mayor is proposing $8 million in new investments to address rental housing issues and homelessness, reflecting a broader commitment to social services in the city.
Broader Context and Comparison
Minneapolis is not alone in considering a property tax increase.
St. Paul Mayor Melvin Carter has also proposed a 7.9% levy increase for the upcoming year, indicating a regional trend toward higher taxes as cities grapple with similar financial challenges.
Potential for Further Increases
While Mayor Frey’s proposal currently stands at an 8.1% increase, the final number could be higher.
The Minneapolis Park & Recreation Board is requesting a 10% increase in its budget, which could push the overall levy increase beyond the mayor’s initial proposal. The city’s current forecast assumes a 7% increase for the parks levy, but negotiations are ongoing.
Decision-Making Process
The final decision on the property tax increase will be made by the Minneapolis Board of Estimate and Taxation, an elected body with the authority to set the levy.
The city, along with other taxing authorities, will engage in negotiations with the board to determine the final tax rate.
Financial Strategies to Minimize the Increase
To prevent the levy increase from reaching even higher levels, Mayor Frey has proposed drawing $19 million from city reserves. This move has helped keep the proposed increase below what could have been a 12% or 13% hike.
Additionally, funds have been reallocated from local taxes on hotel stays, as well as liquor and restaurant sales, to minimize the burden on property taxes.
Looking Ahead
City Council President Elliott Payne has indicated that the next steps will involve closely examining how the mayor managed to keep the levy increase under 10%. If key investments are found to be cut or if the council identifies new spending priorities, there may be discussions about revisiting the proposed levy limit.
Looking further ahead, the city’s preliminary budget for 2026 already calls for an even higher levy increase of 9.8%, suggesting that property taxes may continue to rise in the coming years as Minneapolis navigates its financial landscape.
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