Tax cap to cause tax increases?

Now that the Legislature and governor have provided property tax relief by capping property tax increases at 3.9 percent, what can some homeowners look forward to? Higher property taxes.

“We don’t need an artificial limit. I don’t know how they came up with it, ” Woodbury Mayor Bill Hargis told me this afternoon. Hargis, a CPA who knows a little something about managing money, says the deal reached over the weekend at the Capitol was “partisan politics.”

“It doesn’t show any confidence in local leadership,” he said. “We appreciate what the legislators and governor have to do, but we believe in local control.” Woodbury, it should be pointed out, doesn’t get any local government aid from the state and Hargis, who says he’s politically independent, sees the cap as the legislators and governor sticking their noses where it doesn’t they don’t belong.

He also says it will have the opposite of its intended effect. “I don’t know if our tax levy was going to be up 3.9 percent, but it is now,” he said. “It might’ve only been increasing by 2 percent but now we have to raise it 3.9 percent so that we don’t hurt ourselves. It becomes a target more than a cap.”

Hargis’ logic? Cities like his, which have a small tax levy increase in a given year, have little motivation under the cap to keep the tax levy smaller since they lose the ability in future years to raise taxes above the cap, should the need require it. Instead, he figures, they’ll raise it the maximum allowed to maintain flexibility.

“We’ll survive it, particularly when we’ve done such a good job budgeting. But it’s like getting an ‘A’ in a test and then being told you have to take it over,” he said.

In St. Cloud, Mayor Dave Kleis, has a unique view on this because he served in the Legislature before being elected mayor.

“In previous years, as a former legislator, when I’ve seen cities faced with caps, they went right to the cap. In St. Cloud’s case , we’re not. We have our own policies limiting the increase to growth and inflation. As a legislator, I’ve always believed strongly it’s a local control issue… you have local elected officials, elected by members of the community and they should make those decisions.

St. Cloud does accept local government aid from the state.

  • bsimon

    Can’t argue with Hargis’s logic, on all scores. 1) the state is poking its nose where it don’t belong. 2) he’d be a fool not to raise taxes by the full amount this year, knowing he’s restricted in future years. Once adequate reserves are established, they could revert to only raising by the necessary amount. But the first year under a new restriction, I’d do the exact same thing.

  • GregS

    Hargis nailed that one.