Property taxes are a local decision
Every year at the state legislature there is an extended debate about property taxes. This year was no different, only the names of the players changed. As in recent years the focus of the property tax discussion was around Local Government Aid (LGA).
In brief, LGA payments to cities began in the early 1970s to replace a variety of special aids and tax relief programs for municipal government with a single general purpose program. The creation of LGA had two primary objectives: first, provide property tax relief, and second, provide a similar level of funding for city services. Like many issues at the state Capitol the objective is simple; the implementation, however, is a mess. Certainly this was the case again this year in the LGA debate.
Republican House and Senate members set out to make significant reductions in LGA payments but upon reaching Governor Dayton's desk, they were vetoed. Governor Dayton was joined by most Democrat legislators in the familiar chorus of "reductions in city aid will increase property taxes."
The simple truth is that residential property taxes on average increase every year statewide. With few exceptions cities, counties and school districts continue to increase property taxes due to local spending decisions, not state tax policy.
Recent actions by Minneapolis Mayor R.T. Rybak illustrate this point. Just two weeks ago, Mayor Rybak vetoed an effort by the Minneapolis City Council to retain 10 city firefighters. The council had voted 8-5 to take $300,000 in one-time savings from unfilled city jobs to keep the firefighters working through the rest of the year. Despite warnings that the staff reductions would mean longer response times, Rybak stated: "I am strongly opposed to using additional one-time funding to plug a systemic budget gap in the Fire Department." Sounds like a reasonable and fiscally responsible position by Rybak, until you consider the mayor's next move. The day after Mayor Rybak vetoed the city council's attempt to save 10 firefighter jobs, the city posted a new job opening for a bicycle and pedestrian coordinator.
The position of bicycle and pedestrian coordinator pays between $61,000 and $84,000. The explanation by city officials for the need to hire a bicycle/pedestrian coordinator was that the responsibility is now handled by a number of individuals in the Public Works Department, many of them lacking the necessary "expertise." In response to the veto, the president of the Minneapolis Firefighters, Local 82, called the action an example of misplaced priorities, and stated "when do you stop funding fluff programs if we're really prioritizing?"
But this is just the most recent example of spending priorities in Minneapolis. Does anyone remember the $450,000 for 10 artistic drinking fountains or maybe the $5 million green roof for the Target Center? The list of unnecessary projects and wasted tax dollars would fill pages. Despite the city's spending decisions, Mayor Rybak was at the state Capitol earlier this year pleading for tens of millions of dollars in state aid which flows to Minneapolis with no strings attached. Each year millions of state dollars are spent to buy down property taxes but instead get spent on misguided priorities. Minneapolis will receive $64 million this year in state aid which in turn will help fund fluff programs like bicycle/pedestrian coordinators.
But $64 million in LGA is not the only state aid Minneapolis receives. In 2010 Minneapolis came to the state Capitol to request a bailout for their Minneapolis Employee Retirement Fund (MERF) to the tune of hundreds of millions of dollars. Without the state funded bailout of MERF, Minneapolis property taxes would have skyrocketed.
Again this year, Rybak was back at the State Capitol asking for more state taxpayer help to fund Minneapolis police and fire pensions. Every time Rybak, or for that matter most of Minnesota's other local elected officials, run out of money they come running to the State to bail them out. Like a college student on a spending spree, always asking their parents for more money, local governments are always asking the state to pay for their spending decisions.
City council and county board members should be 100 percent responsible for their spending. It's time local officials and Governor Dayton stop blaming state legislators for property tax increases.
Phil Krinkie, a former eight-term Republican state rep from LinoLakes who chaired the House Tax Committee for a while, is president of the Taxpayers League of Minnesota. GOP Gov. Tim Pawlenty recently appointed Krinkie to the board of the MinnesotaStateColleges and Universities (MnSCU) system.