MANKATO — For Mankato homeowners planning to sell their house, the news is good: home values are rising across the city.

For Mankato homeowners more focused on their 2020 property tax bills, it’s not as positive.

Growing city, county and school district budgets — combined with escalating home values — will add up to rising property tax bills for owners of houses and, to a lesser extent, apartment buildings. Valuation increases, while they happened citywide, varied by neighborhood based on sales prices of comparable homes in different sectors of the city.

“Some of them were as low as 1%,” said Michael Stalberger, who oversees the property valuation process in Blue Earth County, citing the Tourtellotte Park area and neighborhoods below Minnesota State University. “Our highest neighborhood increase was 9.5%.”

Those larger valuation bumps occurred in the new subdivisions on Mankato’s northern-most side behind the commercial area anchored by Home Depot and Menards. (Individual properties anywhere in the city could have seen double-digit value increases if additions or other improvements were made.)

A home with a current taxable value of $142,000 in Mankato would, on average, see its value rise to $150,000 in 2020. The corresponding jump in taxes paid to the city will be 7.6% — from $516 to $555. That same home would see county taxes rise 8.8% from $489 to $532.

A $283,000 Mankato home will, on average, increase in value to $300,00. That would mean, based on preliminary property tax levies approved by the City Council and County Board in September, a 6.8% bump in city taxes to $1,273 and an 8.2% rise in county taxes to $1,221.

Apartment buildings are also increasing in assessed value, but on a smaller scale, and will see their city tax bills edge up by about 1.5% and their county bill grow roughly 2.5%.

Commercial/industrial properties, with their stable valuations, will be writing out slightly smaller checks for property taxes next year — down 1.7 to 1.9% for city taxes and down less than 1% for county taxes.

The shift in the tax burden toward homeowners would be more pronounced if Mankato wasn’t in its longstanding growth mode. About 60% of the new dollars being collected by local governments in Mankato will be paid by owners of newly constructed homes, offices, stores, apartment buildings and industrial facilities.

The remaining 40% of new tax collections by the city, county and school district will be coughed up the owners of homes and apartments via their rising market valuations.

The city of Mankato

The actual taxes paid by Mankatoans next year will be a hair lower than those listed above and those stated on Truth in Taxation notifications sent to property owners in recent days.

That’s because city leaders have decided to trim $124,000 from the preliminary levy of $20.45 million passed in September.

That slight reduction will ensure that the city’s tax rate will hold at the level it’s been at for the past nine years, said City Manager Pat Hentges. A steady tax rate — if properties never changed in value and new buildings were never constructed — would leave the city with identical property tax revenue from one year to the next.

In other words, Mankato’s policy means that its tax revenue grows only by the amount that the city’s tax base grows via new construction and valuation increases in existing properties.

“I don’t know if there’s any city in the state of Minnesota that has consistently done that, particularly in greater Minnesota,” Hentges said.

Mankato’s steady economic and population growth has allowed the city to maintain that philosophy while still pulling in moderately more money each year.

For 2020, the city will collect just under $800,000 in additional property taxes compared to this year — a 3.4% rise.

Most of that revenue, combined with a slight increase in state aid, will go toward cost-of-living adjustments and increased medical benefit costs for employees.

“It’s an increase in (cost of) supplies and an increase in personnel costs,” he said, noting that police, fire protection, snow plowing, park operations, street repairs and other core municipal services rely on staffing. “Typically, 60% of your cost is personnel.”

The council expressed concerns this year about the rising costs of health insurance for city staff. Hentges said it will be a long-term goal to bring down that cost curve through negotiations with the various labor unions representing the bulk of city employees.

Blue Earth County

Mankato residents will see a slight increase in the county portion of their taxes next year, thanks to a 6% Blue Earth County levy increase.

The county plans to have a $114 million budget and will run a $1.4 million deficit. Next year’s levy will be set at about $39 million.

Much of the levy will be absorbed by taxable market value growth, which increased in Blue Earth County by an estimated 4.7% this year. A lot of that growth came from increased property values, however, meaning the county’s portion of property taxes will likely be slightly higher for homeowners.

Agricultural land, which has decreased in value in recent years, is expected to increase by 6.9% on average while residential property will increase by an estimated 5.9% on average. Even apartments, a fast-growing housing segment in Mankato, are expected to increase in value by 1.4%.

That means a homeowner with a $195,000 house — the county’s average home value — could expect to see the county portion of their taxes increase by about $59 under the county’s current plans.

A farmer with property estimated at $530,000, the county average, could expect to see an increase of $90 in county taxes.

Commercial property is expected to decrease by 1.4% in average value according to Stalberger, the county’s property and environmental resources director. That could mean a savings of about $14 on the average commercial property worth $674,000.

County officials say the increased levy will go toward increased staffing costs, future construction projects and equipment needs, and increasing demands on county departments.

“They’re all feeling that volume that comes with additional population,” County Administrator Bob Meyer said.

Included in the budget are five new staff members, such as an IT security position and a part-time community health educator. Blue Earth County is also planning for a 10% health insurance increase, similar to the increase it had in July.

Mankato Area Public Schools

Tax collections by Mankato Area Public Schools will rise just 1.3% in 2020 to $28.3 million, said Tom Sager, director of business services for the district.

Combined with state aid, the district’s primary revenue source, the property tax revenue will bring the total general fund budget to $108.4 million next year.

“We’re looking at about a 4% increase in revenue from last year,” Sager said.

About a quarter of that increase reflects achievement integration aid the state is providing to districts with a particularly diverse student population. The rest of the increase stems from a growing number of students attending local public schools.

“That is a key driver in any increase in school district levies,” he said.

Both the state aid and the local levy are decided largely based on a formula set by the Minnesota Legislature based on enrollment.

“With more students, you might need more teachers. With more students you might need more transportation. With more students, you might need more supplies,” Sager said. “The state formula acknowledges that and allows the levy to increase.”

Most of the additional revenue is targeted at personnel costs — cost-of-living increases, new hires to handle enrollment growth, higher costs for medical insurance and other benefits, he said. About 82% of the district’s budget is consumed by personnel costs.

Staff writer Trey Mewes contributed to this story.

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