MANKATO — Until now, Mankato street lights have been paid for in part with property taxes.
Taking that $450,000 cost out of the budget and funding it with monthly “fees” — paid by all properties, including nonprofits — had numerous nonprofit representatives and community members crying foul during a public forum Monday night at the Verizon Wireless Center.
Several asked: If it was a tax before, then why isn’t it still a tax that is being charged to tax-exempt properties?
“It is basically being arbitrarily changed from ‘tax’ to ‘fee,’” said Councilman Mark Frost, a statement with which Councilman Charlie Hurd agreed. “My attitude is this is still a tax.”
Councilman Jack Considine and City Manager Pat Hentges said the fee isn’t a tax because the cost of the lights will be isolated into a specific fund for a specific service. And having all users of that service paying into the fund is more fair than having that cost be paid solely by property tax payers, they said.
Despite the dispute among the council and dissension voiced by members of the public, the measure passed with a 4-3 vote, meaning the fee will begin appearing on monthly utility bills in January.
The cost to most will be small. Single-family residences will pay $2.50 per month, as will commercial and industrial properties under 75 feet. Two- or three-unit residences will pay $5 per month.
Commercial and industrial properties with more than 75 feet of frontage, as well as tax-exempt properties, will pay 5 cents per linear foot of frontage.
So for the Red Cross, for example, that comes out to $10 per month. The Boy Scouts will pay $45.60 per month. Of the tax-exempt properties, Minnesota State University will pay the most at about $1,160 per month.
But several nonprofit representatives, including church members and VINE Faith in Action, pointed out that their budgets are tight, and every dollar counts. Bob Ihrig, congregation president at Bethlehem Lutheran Church, said the church already went through its budget process this fall, and extra costs impact the church’s ability to serve the community.
“I’m just really concerned about the door that’s being opened for the tax-exempt status of nonprofits,” Ihrig said. “I would caution the council to think of the precedent there.”
Pam Determan, executive director of VINE, said the 1,420 linear feet of frontage for the Nichols building, which the organization recently acquired, will cost about $80 per month, or $960 per year.
“Quite frankly, to a nonprofit, that’s not small potatoes,” she said.
Amy Jo Lennartson, the regional coordinator for the Minnesota Council of Nonprofits, said there are about 95 Mankato area nonprofits that are members of the council. She said several she spoke to were concerned about a slippery slope.
“I think the concern is what will be the next fee,” she said.
Several council members, including Considine, Karen Foreman and Mike Laven, who voted in favor of the fee structure, said their decision had nothing to do with their view of nonprofits.
“The council does appreciate everything that you do,” said Councilwoman Tamra Rovney, who added that there isn’t another viable way to fund street lights because the cost would raise the levy above the max of 2.63 percent. “I do not believe the passing of this ordinance lessens the value of what you do.”
Mayor Eric Anderson, who voted against the street light fee, said Mankato is like a lot of municipalities struggling with how to fund every service they have to fund with ever-tightening budgets and increasing costs. He said difficult decisions often have to be made.
The fee will generate about $500,000 that will be used specifically for street light costs and maintenance.
While the removal of the street light costs from the general fund will provide some property tax relief, the fee cancels that out, Laven said.
As of 2010, 28 Minnesota cities (or 3 percent) had a street light utility fee.