Property tax increases among city, county and schools in the Mankato area have increased significantly again in and will fall on taxpayers already battling higher costs.
The Mankato City Council approved a property tax levy increase of 5.2% Monday, while Blue Earth County was poised for an 8.5% increase and Mankato Area Public Schools was set to raise its levy 10%. Rising expenses, including payroll and threats of federal cuts were contributing factors in deciding on many of the hikes.
A 10% school tax increase would boost taxes on a $250,000 residential property by about $82. One taxpayer noted the school district has lost about 10% of its students over the last few years and wondered if it needed the 2 million square feet of buildings. A fair question.
A Mankato homeowner with a home taxable market value of $325,000, would pay $68 more in city taxes.
Another taxpayer told the Mankato City Council his entire property tax bill would be going up $400 next year, saying the city tax levy at 5.2% seemed high. City officials say they are trying to cushion the blow for even more state and federal budgets cuts next year.
The risk, of course, in putting more burden for local government on local property taxpayers comes in a tax base that may change, sometimes dramatically from year to year.
History showed a significant double-digit decline in some of the biggest retail properties in Mankato just before the time of the pandemic as brick-and-mortar retailers went out of business. That led to major property taxpayers like the River Hills Mall losing several large anchor stories in Sears and Herberger’s. In a similar vein, the value of many apartment buildings soared a few years ago when investors came in and bought up properties for prices sometimes 50% than their value.
And while few taxpayers showed up to challenge councils and board on their tax increases, the few that did show up noted that such increases were not normal and that taxpayers are facing a number of higher costs already, be that rent or groceries.
We are facing uncertain economic times with the first-ever major tariffs on consumer goods, much of which we get from China. We’ve not been in this kind of economic environment for some time. And the Mankato economy also will be impacted by the farm economy, which is also downbound with the reduction in soybean sales to China and always rising input costs.
Should farmland be reduced in value, residential and business taxpayers will make up the difference if governments cannot adjust levies downward.
But there may be time to make adjustments. Local government should scrutinize more than ever each spending program and measure its effectiveness toward goals. And because employee costs are usually the largest percent of any government budget, those increases should be limited with a mind to consider the market and the cost to taxpayers.
Mankato employee pay was budgeted for a 5% increase while its levy is scheduled to go up 5.2%. That seems higher than the market in the current environment. U.S. wages have grown 3.6% to 3.9% over the last year, according to government records. Blue Earth County is trying to limit its payroll costs by offering voluntary furloughs.
Of course, very few taxpayers showed up to any of the truth-in-taxation hearings hosted by local governments. That may be a sign that taxpayers have no problem with projected levies. And maybe they have enough wealth that $68 or $100 more a year is no big deal. Government will be fortunate if that is the thinking.
But the steady growth of Mankato area tax bases also has slowed. There’s risk of higher taxes on the horizon and civic and community leaders would do well to formulate plans now that mitigate increasingly high levies.