Tax board approves full city, park levy

The Minneapolis Board of Estimate and Taxation (BET) voted 4-2 on Sept. 29 to set the city’s maximum 2027 property tax levies. The vote granted both Mayor Jacob Frey’s proposed 11.3% city levy increase and the Minneapolis Park and Recreation Board’s request for a full 5.86% levy increase.

The maximum levy sets a ceiling on how much the city and park board can collect from property owners next year. The City Council can lower it before adopting a final budget in December, but can’t raise it. The weeklong standoff came down to the parks: a gap of about $1.7 million, by the count of BET Vice President Eric Harris Bernstein, in a levy of more than $600 million. Had the board failed to act by Sept. 30, the city’s levies would have stayed at their 2026 levels.

Frey and BET President Steve Brandt voted against the final resolution. Bernstein, Council Member Aisha Chughtai, Park Board President Tom Olsen and City Council President Elliott Payne, who represents Northeast Minneapolis’ Ward 1, voted in favor.

Payne said he supports the maximum levy, adding that the council has “a huge appetite” for lowering the levy through budget amendments. “What’s before us right now still provides for that opportunity,” he said, “and I’m looking forward to working with my colleagues on the City Council to deliver on that.”

The swing vote

The levy dispute centered on the Park Board. Frey initially proposed a 2.5% increase for the park board, which he said at the meeting he later raised to 3%, 3.5% and finally 4%. Olsen said his last offer was to come down $300,000 from the park board’s full request. “Beyond that,” he said, “we would be looking at long-term fiscal harm for the park system, and my duty as park board president is to continue the stewardship of that system.” He said the park board would continue to aim to bolster its revenue streams.

This is the sixth straight budget in which the mayor’s office recommended a smaller park levy increase than the park board requested, according to park board finance staff.

Hennepin County Commissioner Irene Fernando, whose district includes Northeast, urged the board to fully fund the parks in a  Sept. 22 letter. Referring to the Park Board’s levy request and Frey’s initial proposal, she wrote, “the difference between the 5.86% request and the 2.5% placeholder… equates to 26 positions, maintained parks, and full recreation center hours.”

A place of disagreement

With no agreement between the city and Park Board, Bernstein offered an amendment granting the park board’s full request. The amendment also added $150,000 to the board’s own levy, which Bernstein said would let the board explore hiring an auditor, a power it holds under the city charter. The amendment passed 5-1, with Frey voting no.

Bernstein said he had “hoped the City Council, the Mayor and the Park Board would arrive at a number of mutual acceptability.

“We have fallen to a point in the conversation where either we are going to grant the city everything that it has asked for and deny the Park Board a large portion of its ask, or we are going to say there was not a mutual compromise to be reached this year and that we’re going to permit both bodies their maximum request,” Bernstein said. “My hope was to avoid that; my hope was to have more mutual compromise and agreement… But we’ve not gotten there, and I’ve decided not to exercise my inherited role as swing vote to ask the Park Board for heavy concessions or to extract concessions from the city this year.”

“I’ll be up front that I’m very disappointed in the outcome of this negotiation, and I’m disappointed that it came down to my vote,” he said. “I think this was a dispute between the city and the park board, and the fact that we couldn’t get there says some troubling things about the state of those conversations.” He said he offered the amendment to avoid “a catastrophic loss of funds” if the board did not pass anything that evening.

By Bernstein’s math, about 68% of the levy increase goes to the city’s general fund and 16% to the Park Board.

The “no” votes

Frey said he voted no to keep property taxes down. “We had to make a ton of really hard decisions to make cuts at the city level. Those decisions to make cuts, I think, many will disagree with, and I respect those disagreements.

“At the same time, we didn’t get to a number that I could, with a good conscience, support,” he continued, citing the burden on seniors, low-income residents and people on fixed incomes. “I couldn’t vote for a property tax increase of that size.”

Brandt said there is a “structural imbalance” in the city’s budget but that the fix “is falling too much, in this proposed levy, on the taxpayer” and not enough on separating the city’s “must-haves” from its “nice-to-haves.” He also said the budget does too little to rebuild the city’s budgetary reserves.

Brandt said he intends to explore a referendum to add a third public member to the board. The board has six seats: four held by the mayor, the City Council president, a second council member and a park board commissioner, and two elected citywide. Brandt said the board was originally set up so that City Hall didn’t hold a majority of its seats, but that as it’s now constituted, City Hall’s members can “essentially veto” any other faction. The board lost its seventh seat when the library board was abolished.

A “final plea”

“I’d like to make a final plea to my fellow board members for a unanimous vote,” Bernstein said near the end of the meeting. “I don’t think, at the city or at the Park Board, there is any willingness to move on these numbers. So, to me, to vote against this proposal is not to vote because you’re not getting something that you need. It’s to vote against it because someone else is getting something that they want. I don’t think that is a good way to approach this process.

“We weren’t able to mutually bring it down, and I think it’s only fair that we all recognize and share that burden by voting for this tax increase, which I think we can all acknowledge is larger than we’d want. The alternative, again, is to put me in the position of voting for it, which I would rather not do.” He asked everyone to vote for the resolution.

Frey, in response, said, “The right thing to do, for me, is to keep property taxes down as much as we can. I was willing to compromise, for the record. I did compromise… Your vote is your vote, and it is your prerogative to vote for the property tax increase, but it is indeed a property tax increase.”

Chughtai pushed back, noting that every option before the board was a tax increase, including Frey’s own 11.3% proposal. “The idea that we are the ones raising property taxes feels unfair,” Bernstein added.

The BET’s next meeting is Oct. 14. Payne and other council members have said they’ll look for ways to bring the levy down before the City Council adopts a final budget in December, after its Truth in Taxation public hearing.

Park Board Commissioner Dan Engelhart, whose District 1 includes Northeast, said in a phone interview after the meeting, “There’s a big difference between how the Park Board approaches this and how the city’s approached this. We came in with a realistic, honest number showing our entire budget. We can amend from there, but I don’t anticipate us bringing anything down. We came in with what we absolutely needed.”

Engelhart added, “We would have needed (a levy of) 13% to reopen recreation centers on Sundays and keep them open on Sundays… We don’t really have any fat to trim, and we’re happy people have realized the value of the parks.”