By Mark Fischenich
The Free Press
MANKATO —
Property owners across Minnesota and homeowners in particular have borne the brunt of the state’s budget cutting in the past eight years, according to a study by a progressive think tank.
In Mankato, that has meant a 40 percent rise in average homestead property taxes from 2002 to 2010 in inflation-adjusted dollars, said Jeff Van Wychen, Minnesota 2020’s tax policy analyst. Property taxes for an average home in Mankato have risen from $1,195 in 2002 to $1,668 this year.
The change can be directly attributed to cuts in state aid to local governments, Van Wychen said.
It’s a case city officials have been making for years.
“This is a huge problem in greater Minnesota and specifically in rural cities,” said Mankato City Manager Pat Hentges.
Statewide, homeowner property taxes have risen 38 percent and property taxes overall have risen 27 percent, according to the Minnesota 2020 report. A big part of the reason homeowners have been hit harder is that the Legislature in 2001 compressed property tax rates so that rates on business property and high-valued homes were reduced to make them more similar to the rates on lower-valued homes.
Those changes came just before a continuing series of state budget shortfalls left Gov. Tim Pawlenty and the Legislature needing to raise revenue or cut spending. Pawlenty opposed state tax increases and proposed repeated cuts in Local Government Aid to cities and other aid programs for cities and counties.
For most cities, the aid reductions were partially offset through property tax increases, with reductions in city budgets covering the rest.
“Counties, cities and school districts in Minnesota have cut their budgets much more significantly than the state has cut its budget,” Van Wychen said.
In Mankato’s case, per capita state aid has fallen about $250 when adjusted for inflation. City property taxes have risen $100 per capita — leaving a $150 gap that needs to be made up through budget cuts, revenue from other sources or growth in the property tax base.
The story is similar in North Mankato (with per capita state aid falling $184 and property taxes rising $81) and New Ulm (a $144 drop in aid and a $95 increase in local taxes.)
St. Peter and Waseca showed lower reductions in state aid ($61 and $66, respectively) that were largely offset with increases in per capita property taxes ($59 and $75).
Minnesota 2020, founded by former state Rep. Matt Entenza who ran unsuccessfully for the Democratic nomination for governor this year, called for an increase in progressive state taxes to ease the pressure to further raise regressive property taxes.
And Hentges said the issue needs to be considered by Minnesota voters, particularly those in Minneapolis and St. Paul and rural cities and towns, as they evaluate candidates for the Legislature and — particularly — governor.
Hentges said Mankato’s spending next year will be lower than 2006 levels. As the state faces a $6 billion shortfall next year, state aid to local governments needs to be protected if the quality of life here and throughout outstate Minnesota is going to be competitive with wealthier suburban communities.
“If not, there’s going to be a huge disparity in the livability of Minnesota Cities,” Hentges said.
