EDITORIAL: Taxes Mankato taxpayers take body blows

The Free Press, Mankato, Minn.
·2 min read

Dec. 7—If Mankato taxpayers were in a boxing match, the City Council just delivered some body blows with its approval of a 26% tax increase on homeowners Monday.

Taxpayers may have to bob and weave the next few years to avoid the knockout punch to their finances. But the council provided some respite saying they'll lay off with the really painful stuff to get over the fiscal hump where inflation and rising residential values caused this year's pummeling.

Mankato leaders had initially proposed a levy increase that would have resulted in a 33% increase in taxes for an average residential property. The city wisely held off on that shock that likely would have at least bloodied the taxpayers' nose a good bit.

While the actual levy increase — the amount of total taxes collected — rose 8%, the increase in residential property values caused the effective increase to the average home to be 26%, or about $226 a year for city taxes alone. An earlier proposal by the city staff called for a 14% increase in the levy and a 33% increase in taxes.

So staff gets credit for trimming the budget by about $1.5 million, but that came at the $350,000 cost of not upgrading the old playground at Thomas Park. The rest of the budget hole was filled by one-time federal COVID money of $860,000. Relying on one-time money is dangerous, especially if it doesn't fill a one-time hole.

The city also looked a few years ahead making the levy increases lower than this year's increases. Projections call for a 6.24% levy increase in 2024 and 4% levy increases in 2025 and 2026.

The good news was that Mankato remains competitive with like-sized cities and other regional centers. Mankato bested cities of North Mankato, Rochester, St. Cloud and Moorhead in having a lower property tax rate. Only Duluth had a lower tax rate than Mankato, and officials say that may be due to its special authority to fund its budget with sales tax money. And past levy increases for Mankato have been in the 2-3% range.

But there remain many challenges to municipal finance. Inflation and interest rates will be the big uncontrollable factors. City leaders will need to get out their sharp pencils to scrutinize every budget line item from here on out.

Mankato taxpayers can only take so many more body blows.