All posts in the topic What a Property Tax Cap Would Mean to St. Paul (Short link)
Summary
- There are 4 posts — by 4 authors — in this topic.
- Latest post made by Bob McLean at May 19 23:17 UTC
So Governor Pawlenty has said he would like to see a property tax cap
as a required part of any tax bill he signs, and any budget
agreement. The Governor has proposed a 3% cap, or inflation,
whichever is lower. The DFL legislature has counter-proposed a 5.5%
cap.
For the moment, I'll try to ignore the irony of a Governor who slashed
tens of millions of dollars in local government aid for St. Paul
suggesting that it is us who needs help managing our finances well or
predictably, and instead just look at the policy impacts of the
Governor's proposal.
If property taxes cannot rise beyond inflation (or even if they can
rise a small bit beyond inflation), we'll have a helluva time hiring
all those extra police officers John Krenik argues so passionately
for. If our fair city has more kids in our schools, we won't be able
to tap any more money to educate them. Except....
I'm sure someone will suggest that we could just make round what - the
ninth consecutive round - of cuts to city services. From where shall
we cut it? The libraries? Parks and recreation? Sorry, cutting
$5,000 from the Public Works Director's salary won't get you
anywhere. And in a city that is regarded as among the most efficient
and effective cities in metro, I don't think you'll find much waste.
The nature of things is that we'll always find a little waste, and
some will always try to make political hey from those instances.
The reality is property taxes are the one and only significant source
of revenue the City has real authority over, and now the state wants
to take that local control away.
I think - and I thought Republicans thought - that local control was
paramount when it came to budget issues. That's why I think district
councils, at their best, can be an effective part of the policy
puzzle. That's why I like local school councils.
So what do you think capping property taxes will do for the city? And
can the state really make the argument with a straight face that it is
cities that aren't being responsible? Or are property taxes going up
because of state actions?
Two things about this proposal:
It is not only abhorrent to urban Legislators, it is obviously so.
It was proposed at the last minute, not at the beginning.
For these reasons, I don't think anyone will or should take it seriously.
It can only be meant for the election in November. To that end, it's also
a two-fer:
It gives Republicans some additional cover on property taxes.
It blunts criticism that the Governor is anti-rail.
The last point is pretty esoteric, so I don't think it's the most
important. However, this all came up only after Pawlenty was forced to
show his hand on the rail line (and punished Saint Paul severely for
getting it to that point). I do think they are related if only because
Pawlenty said they were related; the only real way to get everything is to
call his bluff.
But we can't, so the point is moot. It won't happen.
If a property cap tax becomes law, then I think the city and/or county should
then become responsible to collect the income tax. Thus the income tax of Saint
Paul residents would not go to the state, it would go to directly to the city.
Not a new idea, but it sounds fair to me.
New York City residents pay both a city and a state income tax.
Paul Nelson
Ward One - D7
Hyde Park
There are problems with a city income tax:
First, if Saint Paul were to adopt an income tax and Minneapolis and the other
metropolitan communities did not, businesses and residents would leave the
city. This has happened in St. Louis, Kansas City, Detroit and Philadelphia.
Second, an income tax can be very volatile. New York's economy suffered a
sudden economic downturn in 2001 - 2002 and quickly experienced a rather severe
revenue shortfall as a result.
Short Story: In the early 1990s, New York City had had a very high combined tax
that included property tax, sales tax and individual and corporate income tax.
Even with the high rates, the City was suffering sever financial problems. As
odd as it might sound, in 1997, instead of raising its taxes, New York City
reduced its property and income tax rates and after the reduction, New York
City's job growth rate exceeded the national average for the first time since
1950. The increased economic activity created considerably more revenue for the
City than was lost in the rate cuts.