Cities Lean Heavily On Property Tax's To Keep Functioning
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posted by Bob at Tuesday, January 20, 2009
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Tuesday, January 20, 2009
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21 Comments:
Cities lean heavily on property taxes to keep functioning
As state and federal assistance dries up, Minnesota's 855 cities are relying more on property taxes for their revenue, a new report finds. And that spells trouble.
By BOB VON STERNBERG, Star Tribune
Last update: January 16, 2009 - 11:26 AM
It will come as no surprise to Minnesota homeowners that their cities have increasingly relied on property taxes to operate in recent years.
But a new report from the state auditor's office quantifies just how dramatically that reliance has grown -- and has sobering implications at a time when the state faces a massive budget shortfall and home prices statewide are cratering.
Between 1998 and 2007, the revenue received from property taxes in the state's 855 cities increased by 98 percent, according to the annual Minnesota City Finances Report. At the same time, the cities' revenue from the state and federal government grew by only 14 percent.
Looked at another way, while cities relied on property taxes for 23 percent of their revenue in 1998, that grew to 32 percent a decade later. During the same period, revenue from state and federal government shrank from 33 percent of revenue to 26 percent.
And that financial shift occurred long before the current crises in the budget and home prices, prompting Auditor Rebecca Otto to sound the alarm about the trend.
"This was happening before everything went south and it spells real trouble," Otto said after the report was released Thursday. "You can only put so much pressure on property taxes before it causes problems."
On the same day that Gov. Tim Pawlenty delivered a State of the State message calling for more spending cuts, Otto said she wanted "lawmakers to know we have issues in Minnesota they have to be very concerned about."
City officials across the state are equally concerned, said League of Minnesota Cities analyst Rachel Walker. "With foreclosures and [home] vacancies shrinking the property tax base, the property tax rate has to eventually go up if a city wants to maintain its services," she said.
And the situation is more dire than in 2003, the last time the state faced a massive budget deficit "because the property tax base was very healthy then," Walker said. "It's very, very different now."
Cities already have lost $66 million in state aid, a significant cut in their budgets, as part of the attempt to close the state's current budget deficit. They're bracing for more as state officials attack a far bigger shortfall in the next two-year budget cycle, she said.
The auditor's report also shows that cities weren't unrestrained in their spending during the decade that ended in 2007. Total spending by the cities totaled $5.32 billion that year, a decrease of 4 percent from 1998 when adjusted for inflation. Total city revenue also shrank, in constant dollars, during that period.
The report found that streets, highways and public safety account for the lion's share of municipal spending, accounting for nearly half of the cities' budgets.
Bob von Sternberg • 612-673-7184
Eric, I miss you honey come back! I promise I won't let these bad boys sodomize you intellectually.
Maybe some of the cities should stop demolishing their tax base!
Lets see, considering the lawsuits this city has to pay ( tax payors have to pay ) defending corrupt city officials and demolishing occupied homes, not requiring banks to pay property taxes on vacant property they have sitting around and the city paying to maintain, where else do you expect the funds to come from ?
When it gets so bad, their won't be a population base in this city to support the community buisnesses that pay property and other taxes.
How about city reform and booting the city council out on their ass.
Jeff Matiatos
Folks this is the result of eight years of Rovian government dished out at the cities from George and Tim.
In Minnesota, cities can't have an income tax, so the only tax that cities can levy are on property owners. In the past prior to the new Rovian government policies (the cities are so blue, even in red states it costs you nothing as a Republican to starve them) some of the income generated by the income taxes sent to the state government from city tax payers went back to the cities that it came from. But now in the modern Rovian world the purpose of income taxes raised from the cities is to support rural, small towns and third ring suburban development (where the good Republicans live).
So, we may some assistance in economic stimulus packages from Washington, but only look for more property taxes from the state.
JMONTOMEPPOF
Chuck Repke
cough it up for the________.
Like how you blame Pawlenty and Bush Chuck.
How do you blame them for running a city into the ground ?
Did Bush and Pawlenty tell DSI to ruin St.Pauls property tax base ?
Hasn't St.Paul misappropriated city funds and overspent its budgets ?
Hasn't the city council supported a dictatorship DSI program that has done nothing but ruin the tax base on a pre-text of making communitys safer through inspections ?
Whats it costing St.Paul citizens to tear down all these homes ?
In todays ecomony, the city will be lucky to find buyers that even want to build on these empty lots.
I predict a spike in traffic and parking enforcement to raise revenue as well as other creative ways to get money from the citizens to pay for city projects and services.
The next mayoral race will be one that is focused on the leadership of Chris Coleman and how he has responded to the plight of St.Pauls
depleted tax base and causes of it.
Who is running against Coleman and what platform are they running on ?
When was the last time St.Paul had a woman mayor ? Or has it ever ?
Give me 5 reasons why Coleman should be re-elected mayor of St.Paul ?
Jeff Matiatos
Jeff has it pretty well summed up CHuck. Now St. Paul is going to get the chance to pay for the party they had.
People wanting to live in St. Paul don't move in because they can't afford the tax now. Investor are reluctant to buy in because of the illegal code enforcement. Businesses are leaving all the time. None of this has anything to do with Rovian politics. It has to do with DFL politics that ran this city into the round.
Sure, Coleman will run for another term on the premise that he will fix the very problems his administration is responcible for.
People will want to know how he intends to do this.
Really, St.Paul citizens should clean house and vote everybody who is currently in, OUT !
We need a revamped DSI department with a new man or woman in charge who recognizes that it is this department that is largley responcible ( with the councils blessings ) for the plight of the property tax base.
DSI marches through neighborhoods shutting down and tearing down homes like Adolf Hitler trounced on Poland and Europe.
We need reform in various departments of this city and a new city and county attorney that will
do what they can to discourage corruption of city officials instead of spending our tax dollars trying to cover up for them.
Sorry to say this, but St.Paul will have to cut city spending by slashing jobs or laying off.
Settle some of these outstanding lawsuits that seem like protracted litigation that only seems to cost St.Paul citizens then mandate reform of government officials by getting rid of the liabilities like some employees at DSI.
It's simple, lower buisness and property taxes, and renters and buisnesses will arrive.
Sometimes you have to go for quantity instead of quality .
In St.Pauls quest for quality at the expence of its tax base, we have lost in the end.
If I were mayor, I would lower taxes and draw people and buisnesses to our city in quantity and .
You run on this platform and you can be mayor !
Jeff Matiatos
Jeff, you're a bonehead.
St Paul never had a woman mayor.
Bill Dahn is running and will be lucky to get on-half of one percent.
Jon Krenick is a weakling and republican- two guarantees of failure in st Paul.
Promising to cut taxes, while our revenues are being cut by the state is a losing campaign promise, especially since the economy is driving more people to rely on city services, is a nutty as a can of Planters.
You're one funny dude.
Your friend in Stillwater
Ok hard core democrat asswipe from stillwater, which really you sound more like Eric, maybe your city is in better shape than St.Paul so you feel you can take the liberty of coming down on me with your insult of my proposals and to make a personal attack against me ?
You got a better idea ?
I guess you don't so shut up.
I didn't say cut taxes all together
fool.
But if you can honestly say that you wouldn't be enticed by the prospect of living in a city with LOWER taxes, then I guess you could only be happy living in the basement of a tax exempt church.
You obviousley missed the part where St.Paul wastes alot of tax dollars defending corrupt officials and using hundereds of thousands of dollars destroying it's tax base with its DSI agency.
You being from Stillwater ( like I really believe you are ? ), you wouldn't have a clue.
Ever hear of cutting taxes as an incentive to encourage spending and investing to help grow the economy ? Kind of like cutting interest rates does wonders to stimulate the housing and lending in our national economy.
You just stay in Stillwater where everyone has a job and doesn't have the problems we have here in St.Paul.
Shut the Fuck up or tell us what you would do !!
Jeff Matiatos
Right Jeff, cut taxes, eliminate the liabilities and wasteful spending, down size government like Reagan did in the 80s is not a bad strategy.
I would think that people would vote for your proposals if they believed you could pull it off without cutting their services.
People on the otherhand need to realize the tradeoff of cutting taxes and downsizing government and liabilities to offset a budjet deficit, as an investment strategy that could draw buisnesses to come to St.Paul whereby creating jobs and increasing the tax base.
The poster from Stillwater is probably a St.Paul City employee, so the idea of cutting jobs and laying off sets him off.
To bad, join the crowd of the other millions without jobs. He is not above the rest of us.
Tom
Jeff read the article. Actually read anything!!!
As the state keeps your income tax monies for their use instead of sending it back to the City, the City becomes more dependent on property taxes and cuts more employees.
This insane arguement that DSI is condemning a lot of houses and that has mcuh of anything to do with the number of vacants is just silly...READ THE ARTICLE!!!
The same thing is happening in every city in the country. There is a mortgage foreclosure crisis.
Do you all live under rocks?
JMONTOMEPPOF
Chuck Repke
Chuck, the city hasn't cut anything right now and what Coleman really means is a hiring freeze which does nothing to take away anything from the budget.
We cannot afford more property taxes and I know you think my idea of cutting taxes is just an election ploy.
St.Paul will just have to use its reserves ( if it even has any ) to get us through and raise revenues in other ways than taxing.
You seem to want to ignore the matter of a depleted tax base and
continue to defend a corrupted DSI
agancy that keeps asking tax payors for more money tear down money to demolish homes and destroy the property tax base.
Did I read it here that more homes in St.Paul were shut down thanks to DSI than forclosures ?
Is raising property taxes the only thing you can come up with Chuck ?
There are so many other ways to raise revenue and save money for a city budget.
Pawlenty will not raise taxes in todays economy, for now the people are relieved.
The point of this post is to bring to light how cities are relying so much on property taxes.
Tell us something we didn't already know.
Now tell us how we can sustain our city services and rebuild our tax base without taxing us to death !
You got any ideas Chuck ?
I am trying to propse an incentive strategy that does have some risks, but you are to arrogant and one trac minded that the only remedy you see is tax tax tax !
People are sick of it and Pawlenty is doing the right thing.
Your a liberal democrat who just likes to spend our money and keep it coming in with more and more taxes.
The Federal Government will have to act quickly to help states recover with a cash infusion.
How about saving billions of dollars by getting rid of all the illegal in this country that we are paying for ?
You liberal democrats like yourself
haven't done anything here at the Federal or State level.
Ask your self how many ways can we trim wasteful spending and earmarking of monies for uneeded projects around the state.
You liberal democrats keep attaching pork barrel projects to bills.
Get rid of these illegals that were paying for.
Jeff Matiatos
Whatcha bad mouthin Jeff for Chuck. He's got it right. You're the one living under the rock you fool. The city used up the entire Demolition budget for the whole year in the first few months of 2008 and had to go get hundreds of thousands more to comtinue their illegal operations against property owners. The fact that htis mortgage crisis is going on all over the country means squat. The city is tearing down their tax base at unprecedented levels and it does have a lot to do with the revenue they take in. wise up man, you'r e behind the curve!
Jeff the City has been cutting staff and service consistantly for the last eight years. Until Chris took office they hadn't done a tax levy increase since the third budget of Jim Scheibel's so, 13 years without a tax levy increase.
Those are the facts, you can make up whatever you want but that is the truth.
City's only have so much discressionary spending and not every dollar is created equal... So, some staff person in the Planning department or in Public Works exists because their salary comes from a part of a Federal Grant to do road planning and development. If you fired them, you can't hire a cop. You don't get the money from the Fed's for one purpose and then say, no, I want to use it the way I want to.
The bulk of the City's budget that comes from Property taxes goes to pay cops and firefighters that is also just the facts.
The people that you guys don't like in DSI come from the fees collected in licensing and inspections. They don't go away if you cut taxes, and the money that is collect in fees IS REQUIRED BY STATE LAW to be used for staffing the monitoring of the licensed activity. So, you can't buy cops or firefighters with that money either.
I know in the dream world that you right wingers live in, that social services are where your tax dollars go, but on this planet in this country they get a very small portion of your money AND THEY GET NONE OF YOUR CITY PROPERTY TAX LEVY.
I know the truth is an annoying thing, but from time to time you have to face it.
JMONTOMEPPOF
Chuck Repke
Chuck, perhalps what your saying about the tax levy is true, but what I am saying is that our tax base, as opposed to taxes collected is diminished so to the point that it needs to be rebuilt and how is Chris going to do it ?
Without a tax base, your raising taxes on no one .
Its a bad time for Coleman to be running, but if he has no opposition and or that opposition has no better plan than Coleman, Coleman will get re-elected.
How about city offices opening 3 hours later and closing them one day a week ?
The judiciary is already cutting back like that.
Jeff Matiatos
"You don't get the money from the Fed's for one purpose and then say, no, I want to use it the way I want to."
Oh really Chuck! The city doesn't mind taking money for one thing and using it to demolish low income housing do they now?
Jeff, workers have contracts. Most city employees are unionized. So, you could give them all an extra day off but the annual salary would be the same.
I think it is great for people to guess at what they would do but the problem is there isn't much you can do as a City with monies that are from the property tax other than close playgrounds, libraries, police stations, fire stations and a few public works employees.
As 7:55 mentions one of the things that Federal CDBG monies can be used for is to demo blited property if it meets certain conditions... but you can't hirer a cop with it.
JMONTOMEPPOF
Chuck Repke
"As 7:55 mentions one of the things that Federal CDBG monies can be used for is to demo blited property if it meets certain conditions... but you can't hirer a cop with it."
You can't have your inspectors lie to get to those "certain conditions" either Chuck. Would you like me to elaborate?
Please - go on.
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