MANKATO —
A proposal to remove $500,000 in street lighting costs from property taxes to a new fee got fleshed out Monday in a City Council work session.
It would cost Mankato households an estimated $2.50 a month more on their utility bills, and other entities would pay based on how much land they own that borders the road, at 5 cents per foot. The hospital, for example, has 2,756 feet along a road and would pay $137.80 per month.
Minnesota State University would pay $1,159.45 per month.
The proposal is seen as a way to more fairly distribute the costs of street lights, which benefit property tax paying and tax-exempt properties alike.
Councilman Jack Considine praised the idea.
"You're looking at something that is transparent. You have a specific fee for a specific service. It also represents property tax relief," he said.
That's because charities -- like the hospital and university -- don't pay property taxes, but would be charged this fee.
An estimated 20 percent of this fee would be collected by entities that don't pay property taxes. About 22 percent of the land in Mankato is occupied by tax-exempt properties, though they comprise only about 3 percent of the parcels.
As of 2010, 28 Minnesota cities have similar street light fees.
Councilman Charlie Hurd said he would support the change if it were revenue-neutral -- meaning that it collects no more than is currently spent on street lights.
City Manager Pat Hentges said it would be close, perhaps within $50,000 or so.
No one opposed the measure at the work session, though Councilman Mark Frost, who wasn't at the meeting, called it a "massive tax increase" in an email.
It would be difficult, however, to remove the fee and put the $500,000 line item back in the general fund. That amount was already taken out of the draft budget, and the council cannot raise its levy increase above 2.6 percent. That means the council would have to make an equivalent amount of cuts to make space for the $500,000 item in the budget.
The council will likely set a December public hearing on the measure during its Nov. 26 meeting.
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