Andrew Hawkins delivered a comprehensive analysis of Minneapolis’ property tax landscape, underscoring the increasing trend of property taxes, which account for over 50% of the city’s revenue. He presented a breakdown of property tax levies, noting that 80% are allocated to city-related items, with smaller portions going to entities like the Minneapolis Park Board. Highlighting the pressure on property taxes, Hawkins pointed out the adverse impact of rising taxes, which could push residents to seek housing outside the city due to affordability issues.

The city’s dependence on intergovernmental revenues, including substantial local government aid from the state projected at $71 million for 2025, was emphasized. Hawkins also described the role of special use taxes, such as the Minneapolis entertainment tax, which is projected to generate $26.9 million in 2025. Despite these sources, Hawkins stressed the need for exploring more diverse revenue options to bolster the city’s financial stability.

A significant portion of the meeting focused on comparisons with other cities to identify potential revenue opportunities. The disparities in revenue streams were evident, with Minneapolis generating less revenue per capita from sources within its control compared to cities like Kansas City and Boston. The comparison revealed that Minneapolis is more reliant on intergovernmental revenue than its peers, highlighting the limitations of state-imposed regulatory frameworks on tax measures. This reliance underscores the urgency to explore alternative revenue sources such as land transfer taxes, business taxes, and service fees already implemented in other cities.

The meeting also addressed the challenges of implementing new tax measures due to state laws, which complicate efforts to create additional revenue streams. Participants expressed concerns about the limited tax categories available to Minneapolis, pointing out that the city ranks third in property tax rates among comparable cities. Additionally, Minneapolis ranks fourth in per capita charges from public services.

Discussions highlighted the potential for service charges and fees, which are less restricted by tax regulations, to provide additional revenue options. The idea of voluntary Payments in Lieu of Taxes (PILOT) programs was raised as a means to engage tax-exempt entities in contributing to city services without imposing mandatory measures. Such programs have been successful in cities like Boston, which has a high percentage of tax-exempt properties.

In addition to revenue discussions, the meeting touched on the broader issue of municipal funding challenges. Participants acknowledged the pressure from federal scrutiny and external factors, which drive cities to innovate in funding strategies. The need for legislative adjustments to enhance local taxation authority was a recurring theme, with participants expressing frustration over historical resistance from the state legislature to redefine downtown taxing boundaries.

The discussion also covered the potential for collaborations with higher education institutions, such as the University of Minnesota, to explore contributions for city services. The importance of understanding property tax structures was emphasized, with comparisons made to the tax-exempt land in Saint Paul.

Furthermore, the meeting addressed internal operational improvements, including efforts to streamline BET’s budgeting and financial processes. The Senior Advisor announced plans for BET to acquire its own purchase card. Discussions on improving onboarding processes for new officials and enhancing relationships with city departments were also noted as ongoing efforts.

The meeting concluded with a focus on ensuring transparency and collaboration within the Board of Estimate and Taxation. Participants highlighted the benefits of sharing knowledge and resources across departments, which could lead to more informed decision-making and operational efficiency. The Vice President’s motion to adjust staff compensation was discussed, with an emphasis on aligning pay structures with city policies.