MANKATO — After poring over the 2020-21 city budget for several hours this week, the Mankato City Council appears ready to accept the tax and spending recommendations of City Manager Pat Hentges.
The proposed budget would collect 4% more in property taxes next year and 4.8% in 2021 — boosting total collections from the current $19.65 million to $20.45 million in 2020 and $21.43 million the following year.
Roughly half of the increased collections would come from newly constructed homes, apartments and businesses. Most of the rest would fall on existing homeowners and apartment building owners.
At the end of a marathon budget workshop Monday, Council member Mark Frost suggested Hentges and Deputy City Manager Alison Zelms be instructed to cut the levy increase in half.
Frost said the suggestion stems from conversations with constituents in his ward.
“They consider themselves to be very middle class and they’re having trouble even with the 4%,” he said. “... These people are making $80,000 a year, and they’re just squeezed.”
Asked by other council members if he had suggestions for spending cuts to match the nearly $400,000 in tax collections he hoped to eliminate, Frost said he’d leave that up to city management.
“We let Alison and Pat decide what has the least impact on quality of life, what has the least impact on public safety,” Frost said.
Council member Karen Foreman noted the city’s tax rate is not increasing under Hentges’ budget — meaning people will only be paying higher city taxes because the values of their homes are rising.
“Why does the value of their home go up?” Foreman asked. “The value in Mankato goes up because it’s a great place to live.”
It’s a safe city with a vibrant economy and quality government services, and the tax levy contributes to all of those positive attributes, Foreman said. She then asked Frost if the complaining constituents would rather see their home values declining because they live in a struggling city.
“They want their value to go up but their property taxes to go down,” Frost said.
“The world doesn’t spin that way,” Foreman said.
Zelms, overseeing the workshop in Hentges’ absence, said it would be difficult to reduce the proposed tax collections by nearly $400,000 without impacting the Departments of Public Safety and Public Works because property taxes go disproportionately to those two areas.
“Ask them what snowstorm they don’t want their street plowed,” Foreman said of the concerned taxpayers referenced by Frost.
Zelms said more council members would need to back Frost for the administration to rewrite the budget, which is set to go before the public Dec. 2 and to be approved by the council no later than Dec. 9.
“I’m hearing one person out of seven looking for that,” Zelms said of revised budget. “I’m not hearing a majority.”
Foreman suggested it would be easier to gauge public sentiment next month after Truth in Taxation statements are mailed out to all property owners. Those statements show the specific impact on each property of the preliminary levies approved by the city, Blue Earth County and Mankato Area Public Schools.
The initial projections of the impact of the city levy predict that the owner of a $200,000 home, facing a typical market value increase, would pay $53 more in city taxes next year. The owner of a $1.4 million apartment complex would pay $114 more. Commercial and industrial properties, which are seeing their values decline, would pay less in municipal property taxes next year.
Beyond the property tax increase, Mankatoans will be seeing increases in water, sewer and garbage/recycling rates. A typical home will pay $34.56 more per year for water/sewer service in 2020 and an additional $28 more in 2021. Garbage rates are slated to rise about $6 per year each year.
While the city drafts a two-year budget, only the 2020 taxing and spending decisions will be finalized in December. Any increases in taxes and fees for 2021 will be reviewed a year from now and given final approval in December of 2020.