Sticker shock as taxpayers hit with steep local government tax hikes

There’s a double whammy hitting Minnesota taxpayers. Gov. Tim Walz and many legislators are dreaming up new ways of burning through a record $7.7 billion state budget surplus, rather than return it to its rightful owners, who’ve been vastly overcharged. At the same time, local governments across the state are in the process of gouging taxpayers with some of the highest property tax increases in memory.

Mankato provides a good example of the increased cost of local government residents will be expected to absorb across the board in 2022 with a breakdown by the Free Press.

The increase in property tax collections by the city of Mankato, Blue Earth County and Mankato Area Public Schools in 2022 will be less than what most of their counterparts across Minnesota are approving, but shifts in the tax burden are still pushing homeowner taxes noticeably higher.

The city, for example, is planning to collect $21.3 million next year in real estate taxes — 2.4% more than this year and well below the average increase for Minnesota cities of 6.6%, according to preliminary levy data tabulated by the Minnesota Department of Revenue.

The county levy will increase by 2.5% if the County Board sticks with its preliminary levy when approving the budget later this month. Statewide, the average increase for counties is 3.7%.

And the school district is set to slightly boost its property tax collections by 1.3%, less than a third of the average hike of 4.6% across all districts in Minnesota.

But the bill to taxpayers will be even greater than those percentages given the blow-out in property evaluations for families who own a home.

Taxes paid by homeowners, however, will be jumping by much more than those percentages. That’s because the taxable market values of homes are rising while the values of businesses are dropping, shifting more of the burden of paying taxes to homeowners.

The average Mankato homeowner will see city taxes rise more than 6%, according to calculations provided by Michael Stalberger, director of the county’s Property and Environmental Resources Department. So the $912 dollars paid to the city in 2022 on the average value home — a $213,000 house rising in assessed value to just under $224,000 — will be $53 dollars more than this year.

So whatever happened to the millions in pandemic funding cities, counties, and schools received to offset the financial impact of the shutdown on local government and taxpayers?

Like the county, the city is targeting federal COVID relief aid at one-time expenditures.

The additional tax revenue being collected will be used to restore some cuts made to the Public Safety Department during the pandemic and to beef up accounts dedicated to the future replacement of equipment and anticipated major repairs and upgrades that will be eventually required at city facilities.

“Essentially, it’s the savings plan,” Arntz said.

But hey, at least the pressure’s off of local government officials compared to last year, even if that means putting more pressure on the taxpayers left holding the bag.

Nevertheless, settling on next year’s budget late this winter and early next spring should be less stressful than the task facing the board a year ago. Back then, the district’s finances were devastated by COVID and reserve funds were largely depleted.

“Like your own household, you can only live like that so long,” Sager said, adding that revenues and expenditures are now much closer to alignment. “The heavy lifting really occurred last spring.”

Additionally, the reserve funds are being replenished with federal COVID-relief funding.

All of which adds to the urgency of refunding the historic $7.7 billion state budget surplus to Minnesotans, whose family incomes buy less thanks to runaway inflation, yet pay out more than ever to local, county and state government.