Minneapolis' next property tax increase could be the biggest in more than a decade
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Minneapolis Mayor Jacob Frey unveiled his budget proposal yesterday. Photo: Kyle Stokes/Axios
Minneapolis Mayor Jacob Frey is proposing the largest city levy increase since at least 2008 in next year's budget.
Why it matters: The 8.1% jump, announced Wednesday, would raise property taxes by around $200 for the median homeowner.
- The collapse of downtown commercial property values means a larger share of this year's property tax burden will fall on homeowners.
The big picture: Bills are coming due at city hall for inflationary costs and rising salaries as federal pandemic relief funds sunset at the end of this year.
- The city also must hire more staff and invest in new infrastructure to fulfill court-ordered police reforms.
Plus: Frey is proposing to ramp up efforts to reactivate downtown, including Nicollet Mall upgrades and an existing workgroup looking to fill downtown storefronts.
- The mayor also wants to add $8 million in new investments in rental housing and homelessness response.
What they're saying: "My administration worked to find ways to do more with less, and I'm really proud to say that we did," Frey said in a speech Wednesday.
- "I'm not expecting us to celebrate this lift," he added, "because our residents have a new lift of their own — in property taxes — but this budget provides a way through."
Context: These are not the only tax hikes expected around the Twin Cities.
- This week, St. Paul Mayor Melvin Carter proposed a 7.9% levy increase.
The fine print: Minneapolis' increase could be larger than 8.1%, depending on what happens with the Park & Recreation Board's own budget request.
- The city's current forecast assumes the parks levy is set at 7%, but the park board is pushing for a 10% increase.
Between the lines: Ultimately, a separate elected body — the Minneapolis Board of Estimate and Taxation — has the power to determine how much taxes can increase.
- The city and other taxing authorities will negotiate with the board over the final number.
The intrigue: The mayor plans to draw $19 million from city reserves — a move that kept this year's levy increase from spiraling to 12 or 13%, budget officials said.
- Frey also minimized the tax hike by transferring funds from local taxes on hotel stays and on liquor and restaurant sales downtown.
What we're watching: City Council president Elliott Payne told Axios that the next step will involve digging into the details of how the mayor was able to keep the levy increase under 10%.
- If the mayor's budget cuts key investments, or the council wants to spend on new priorities, Payne said he's open to revisiting the levy limit.
What's next: The city's preliminary 2026 budget calls for an even higher levy increase: 9.8%.
Editor's note: This story and its headline have been corrected to reflect that the tax increase could be the biggest in more than a decade (not in a decade) and that the Park and Recreation Board does not set its own budget.