Local cities in middle of tax rankings

Rates go up in ‘08 as tax base growth slows

An annual tax ranking of Minnesota’s local governments puts most of south-central Minnesota near the middle of the pack.



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Mankatoans’ taxes rank 163 out of 226 greater Minnesota cities, putting it in the 72nd percentile. North Mankato ranked 91 and St. Peter ranked 95.

Each year a St. Paul nonprofit called the Citizens League compares the tax rates of cities, counties and school districts. The tax rate is the percentage of the cities’ average home market value that is taken in taxes. The highest rate is 2.120 percent, in Elbow Lake, and a Cook County area saw the lowest at .296 percent.

In Mankato, the average home market value is $165,549, and the tax rate is .919 percent. Multiply those, and you get your average home’s property tax bill — $1,521.39.

A city’s tax rate, as the Citizens League uses the term, is actually a compilation of the tax rate for the city, county and school district. Another key facet is the average home price — taxpayers in a city with costlier houses may have lower tax rates than a city with cheaper houses and a smaller tax base.

Take Springfield, a city of about 2,150 in Brown County.

The city itself has the third-highest tax rate in the greater Minnesota, but the average home price is only $62,987. So while Springfield doesn’t come close as far as total taxes per person, it rates very high because the tax base is smaller.

“Yes, the cost of living can be lower there, but not in a way that offsets not having as much market value,” said Bob DeBoer, director of policy development at the Citizens League.

Malcolm Tilberg, Springfield’s city manager, said the city has been replacing aging streets and utility pipes over the past five years. About 40 percent of the city’s total tax is comprised of payments on this debt.

“You can spend millions and millions in these little towns and still never completely take care of the 100-year-old infrastructure,” he said.

Eagle Lake taxpayers pay the lowest tax rate in south-central Minnesota, ranking 177 with a rate of .867 percent. The city government itself ranks 144 out of 226, Blue Earth County is 131 out of 171 and the Mankato school district is 120 out of 183.

Mayor Tim Auringer credited the City Council and the steady increase in tax base for keeping taxes low. And Eagle Lake recently borrowed $2.5 million to build a new city hall and public works garage, so he says the city isn’t neglecting infrastructure.

DeBoer said he noticed this year when compiling the rankings that more and more cities are seeing their taxes go up faster than the market value of their average homes.

If tax base growth isn’t keeping up with taxes, residents will have a higher percentage of their property taxed.

DeBoer expects this trend, fueled by the housing slump, to continue for at least one more year.

Also new this year is a tax base breakdown for each city.

In Mankato, residential properties make up 47.4 percent of the tax base, with commercial, industrial and apartment taxes making up most of the remainder.

By comparison, St. Peter’s commercial and industrial sector accounts for 10.2 percent of the tax base, whereas that same sector amounts to 31.5 percent of Mankato’s tax base.

There’s no ranking system here, as it’s included to add context, DeBoer said. In this example, stagnant home values would probably hurt St. Peter more than Mankato, which relies less on them.

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