Why Twin Cities property taxes could spike this year
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It's not just you: The early property tax notice that recently arrived in the mail probably was higher than usual.
The big picture: In part, the sharp levy increases across the Twin Cities reflect the flipside of President Trump's "big, beautiful bill" (BBB).
- The BBB means lower federal taxes for many metro-area taxpayers — but it also cut social service spending and passed many of the costs to smaller agencies, lobbyists for cities and counties say.
State of play: In the Twin Cities, Anoka and Scott counties and 40 cities are contemplating double-digit property tax increases.
- In many communities, an outsized share of this pain will fall on homeowners as once-lucrative office spaces continue to decline in value.
The latest: Property owners began receiving truth-in-taxation notices last week outlining next year's potential local property tax bills.
- Cities, counties, schools and other entities cannot charge more than the levy increase proposed on these notices, but can approve smaller increases.
The fine print: Those notices do not reflect the results of school funding ballot measures, a majority of which passed on Nov. 4.
Reality check: Federal policy shifts are only partially responsible for these increases, which are also driven by the fast-rising costs for employee wages, energy, insurance and construction materials.
- Recently expired federal pandemic relief money may have also helped cities or counties stave off larger levy increases.
Plus: State mandates — including a new paid family and medical leave law — are also driving new costs for some local governments, the Star Tribune reported.
Friction point: The BBB marked "a transformational shift" of federal responsibilities to local governments, the Association of Minnesota Counties' Matt Hilgart told Axios.
- Minnesota counties administer SNAP benefits, but the "big, beautiful bill" halved the funding counties receive to process applications and benefits payments.
- This, plus other policy changes, could cost counties an additional $116 million — and Hilgart said counties have little choice but to boost property taxes to pay for it.
Zoom out: Cities could also pay for downstream effects from the BBB's sweeping overhaul of Medicaid, and may already be paying for infrastructure projects whose funding the BBB is now phasing out, the League of Minnesota Cities' Daniel Lightfoot told Axios.
By the numbers: Crystal, Rogers and Robbinsdale taxpayers are facing their second consecutive year of 10%+ city levy hikes combined with Hennepin County's largest rise in decades (7.8%).
- Dakota County is proposing its second consecutive 9.9% levy bump, and Ramsey (9.7%), Carver (8%) and Washington (6.9%) counties' proposed increases would all be their largest since at least 2008, according to state Department of Revenue records.
- Minneapolis' potential 8.1% levy increase would be the city's largest since 2008.
What we're watching: Hilgart said counties are likely to plead with the Legislature next year for help — and a "broader conversation" about how local government is funded.
- "We are overly dependent on the property tax system," he said.