Why are taxes going up?

A member the obscure Board of Estimate and Taxation offers comments about taxes in our fair city:

As to the question of higher taxes, yes, taxes have gone higher for many homeowners. There are several reasons for that. For individual homeowners, they are paying a higher percentage of the overall tax bill. This is due to a couple reasons. First residential property values have increased relative to commercial values. The second reason is that the legislature made changes in the tax system to reduce commercial property taxes. Now it is like a balloon, squeeze down one side and the other pops up. Ten years ago, homeowners paid about 35% of the total tax bill while last year we were now near 60%. This year this is coming down as residential values decline relative to commercial values but not very much as commercial values have started to decline also.

This is merely a technical explanation of how part of the tax burden is borne. More directly, taxes are higher because the City government is spending more and exerting more control over our lives.

Property taxes are only one of the costs of government. The sales tax, various fees and licenses, and most nefariously, the cost of complying with City ordinances all drain productive energy from those who live and work in Minneapolis.

As to the total levy, yes the total amount collected has gone up. There have been a number of drivers. Our partnership with the state called Local Government Aid has been unraveling. The residents chose to approve a Library referendum, which increased their taxes. The pensions that we promised to people 20 or 30 years ago have bills that are coming due. Health care costs for our employees have been skyrocketing. There are other cost drivers too.

In other words, we’re paying today for bad choices in the past. The City doesn’t control it’s LGA allotment. It was unwise to fund Core Services with Local Government Aid. The City’s labor contracts have been drafted to benefit workers over residents. The folks who saddled the rest of us with higher taxes via referendum are finding that they’re not getting what they were promised.

Now I don't want to give the impression that I think the City Council and Mayor walk on water. They don't. They have done things I have not agreed with. And I think that there are definite opportunities for improvement. But I also don't want to leave you with the impression that there is some simple magic bullet out there, some free lunch that if we just looked at things differently that we could provide all the services we need and cut taxes at the same time. There is no free lunch. Lower taxes mean lower service levels.

I agree. There ain’t no free lunch. Lower taxes mean lower service levels. But Becker does not address a more fundamental question: Which services are necessary, and which are luxuries? Is everything the City does absolutely necessary?

I guess I would close this with a profound moment I had last year. I gave a woman a ride home from our Truth in Taxation hearing. I gave her a ride to her home that she was being taxed out of. Taxed out of because of decisions I had made. And at the same time, I knew that she was not in a particularly good part of town and if I hadn't done the things I did, there wouldn't be enough cops to provide the minimum policing that she had and the pathetic level we are maintaining our streets at would be even worse and that the programs that we offer at our parks for the kids in her neighborhood would be even less. And that is the decision that I have to struggle with every year, how many people get taxed out of their homes and how many kids die because we didn't have enough cops on the street. There is no answer where you can have both - low taxes and high levels of services. Everything is a compromise with no good answers. But you still have to have choose an answer regardles! s.

This is an appeal to emotion. “How many kids die,” is great rhetoric, and I am confident Becker feels deeply for the people shes sees the City stomp on. But intentions are not outcomes. Our City Council feels deeply for us, and yet the woman in Becker’s story is still taxed out of her house.

Government is not a compassion contest. There are no solutions, only trade-offs. Government must minimize its footprint on the people, leaving each of us more money and more liberty to help those who need it.


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