The St. Paul City Council will have the unenviable task on Wednesday of approving a maximum tax levy limit that would add nearly $35 million to property taxes in 2020.
The $190.7 million levy would be a 22 percent tax increase over the current year.
The number represents the most that could be collected from property owners next year. It may be a fraction of that. It depends in large part on the outcome of a public referendum on organized trash collection.
The maximum tax levy is just that — a maximum.
Between Wednesday and the finalization of the city budget and tax levy in December, the tax levy could be adjusted downward — in this case, far downward — but it cannot increase above that limit.
A year ago, the city council approved the 2019 tax levy of $156 million, which was $14.7 million higher than the 2018 levy, for an overall increase of 10.46 percent.
WHY A 22 PERCENT HIKE?
So why might the city council contemplate increasing property tax collections by 22 percent next year?
Much of it has to do with the Nov. 5 ballot, when residents will determine whether to support the new trash collection system that St. Paul rolled out a year ago.
If voters vote it down, the ordinance that created the billing system would be struck from law, but city officials believe they can still keep the overall system intact.
They would do that by moving $27 million in funding from direct fee billing to the general fund, which is heavily supported by citywide property taxes.
After combining the proposed St. Paul, St. Paul Port Authority, Ramsey County and St. Paul School District levies, on top of other special taxing districts, the owner of a median-value St. Paul home — $199,800 — would see their property taxes rise $356, or 12.6 percent.
Of that increase, trash collection accounts for $185, or more than half of the total.
Early voting started Friday in Ramsey County and polls have already opened at 90 West Plato Boulevard.
The percent increase is nearly five times larger than the levy increase proposed by St. Paul Mayor Melvin Carter in August.
City council members at the time had asked the mayor to keep the proposed tax levy increase below 5 percent, which he did.
AUGUST BUDGET PROPOSAL: 4.85 PERCENT
Carter’s budget proposal, unveiled in August, calls for a 4.85 percent increase to the tax levy, which is the sum total of all the property taxes collected in the city.
In other words, the levy would rise by $8 million dollars, growing from $156 million this year to $164 million next year.
The mayor’s $622 million city budget proposal — which draws funding from a variety of sources, including the tax levy — represents a $10 million spending increase over the adopted 2019 budget of $612 million.
The mayor has said the increase is largely pegged to inflation and labor costs negotiated through collective bargaining agreements. The 2020 budget also covers a few new initiatives, such as $2 million to reconstruct Fire Station No. 7 on the city’s East Side.
The city also will maintain a library social worker, add electric vehicle charging stations, expand rec center hours and upgrade parking meters. The additional rec center hours come in response to earlier public school start times in the city.
Otherwise, the 2020 budget shaves spending virtually everywhere, cutting funding for everything from downtown hanging baskets to library collections.
Under the mayor’s proposal, the number of authorized police officers would drop from 635 to 630, and two weeks of fire academy training will be converted into on-the-job training. Overall hiring citywide will be trimmed by about four personnel.
ORGANIZED TRASH COLLECTION
The mayor’s proposed tax levy numbers could change drastically.
On Nov. 5, St. Paul voters will be asked a yes or no question on “Residential Coordinated Collection,” with a “no” vote being “a vote to get rid of Ordinance 18-39,” a key city ordinance underpinning the trash collection system the city rolled out with a group of private haulers in October 2018.
If the “no” votes prevail, Carter and officials in the city attorney’s office believe that the trash collection system can continue for the remaining four years of the haulers’ contract, albeit funded by property taxes.
In other words, nothing would change for residents but the billing, with $27 million in costs spread out among all the taxpaying entities in the city, including businesses, large and small apartment buildings and single family homes.
The legality of that move remains to be seen.
The Minnesota Supreme Court, which recently ordered the trash collection question to go to ballot, has yet to spell out its reasoning following oral arguments in Bruce Clark vs. City of St. Paul heard in August. The lawsuit was backed by St. Paul Trash, a group of landlords and residents opposed to the city’s five-year contract with a consortium of 11 haulers.
STREET COSTS AND EARNED SICK LEAVE
Trash collection isn’t the only economic wildcard.
Two ongoing legal cases seek to force St. Paul to rip up how it pays for street sweeping and street lighting, as well as mill and overlay roadwork, both of which could also impact taxpayers.
The St. Paul City Council recently held a closed-door session to discuss the status of the two cases: First Baptist Church vs. City of St. Paul, and Christina Anderson vs. City of St. Paul.
Under legal pressure, the city of St. Paul moved two-thirds of its $32 million street assessment program — then known as the Right-of-Way maintenance program — in 2018 over to the general fund to cover everything from snowplowing and tree-trimming to sidewalk crack sealing.
That decision, based on an August 2016 Supreme Court ruling, effectively shifted the majority of ROW costs from direct billing over to property taxes.
In 2018, the city’s tax levy increased by about 19 percent as a direct result of the shift, and by 24 percent overall. Direct ROW assessments decreased about 70 percent.
An ongoing legal challenge brought by First Baptist Church and additional plaintiffs seeks to move the remaining one-third of the program over to property taxes, as well.
The plaintiffs say general costs for street sweeping and street lighting should not be borne by non-taxable entities such as churches, schools, hospitals and other nonprofits. Instead, they say those services benefit everyone and should be paid for through taxes, not fees.
That’s not the only legal challenge in the wind. In July, homeowners Christina Anderson and Simon Taghioff, the Soo Line Railroad and more than 20 other property owners filed a lawsuit against the city of St. Paul over mill and overlay assessments.
Plaintiffs in both cases are represented by attorney Jack Hoeschler, who said he will begin asking for attorney’s fees to be rolled into any damages potentially awarded by the courts. That could also impact costs to taxpayers.
Other legal pressures could also impact city coffers.
A class action suit filed in Ramsey County District Court this week accuses the city of failing to offer paid sick leave to the city’s lifeguards and seasonal, part-time employees in 2017, 2018 and the first five months of 2019, in violation of the city’s own sick leave ordinance.
Attorney Mark Smith is asking for upwards of $50,000 in damages, or $250 per violation, on behalf of at least 223 employees, and alleging multiple violations per employee.