St. Paul Mayor Melvin Carter unveiled a $782 million budget proposal for 2023 that seeks to shore up core city services by adding 53 new positions across departments, such as carpenters, plumbers and other maintenance workers for Parks and Rec and basic life support medic cadets for St. Paul Fire, but otherwise offers few new cuts or frills.
That said, many property owners will still be in for sticker shock, in part as a result of shifting street maintenance costs from fees to property taxes. The property tax levy, or total amount of tax dollars collected citywide, would increase by 15.3 percent, or $26.9 million, the largest increase of Carter’s tenure in office and the largest tax hike since 2018.
If the city budget and tax levy are approved by the city council in December, the owner of a median-value St. Paul home ($261,800 in 2023) would likely see a $231 increase next year in their property taxes. Fees for street sweeping, street lighting and seal coating work performed after the current year would disappear.
Carter on new Rondo housing fund for low-income families impacted by I-94 construction, as well as budgetary inflation pressures: pic.twitter.com/SJDOZYcPm6
— Frederick Melo, Reporter (@FrederickMelo) August 18, 2022
The mayor also unveiled plans to ask the city’s Housing and Redevelopment Authority to create a homebuying and home remodeling fund for descendants of families displaced by construction of Interstate 94 through the Old Rondo neighborhood in the 1960s. Backed by the city’s existing affordable housing trust fund, the “Inheritance Fund” would make up to $100,000 in “forgivable” loans available to income-qualified families, with the expectation the loan principal would not have to be paid back if the property owner remains in their home for 15 years.
“That Inheritance Fund is really about repurposing existing dollars, not asking the city for new dollars,” Carter said.
Carter, who delivered his annual budget address Wednesday morning at Harriet Island’s Wigington Pavilion across from downtown, said the sizable tax levy increase in his budget proposal was driven by two major factors. Roughly half the increase was spurred by a desire to maintain core services at existing levels, despite inflationary pressures and growing labor costs. The mayor’s budget proposal calls for most city departments to add at least a single staffer, though several would add more.
“Same as every family and resident, the work of the city costs more every single year to do,” said Carter, addressing the media following his address.
St. Paul police, budgeted for 763 full-time equivalent employees this year, would grow to 782 FTEs. None of the added staffing would expand the department’s authorized strength. Instead, 15 of the new positions would be cadets for the Law Enforcement Career Path Academy (LECPA), and the other four would be civilian support positions. The goal is for the department, which has lost officers to retirements and attrition, to maintain its sworn strength at 619 officers following two police academies this year and another two next year.
The fire department would grow from 496 full-time equivalent employees to 504, adding six basic life support medic cadets and two arson investigators.
The St. Paul Department of Safety and Inspections would expand from 150 to 157 FTEs, including an added building inspector, an assistant building official and a sheet metal inspector. St. Paul Parks and Recreation would grow from 595 FTEs to 608, a response in part to ballooning enrollment in youth sports. With Carter’s blessing, Parks and Rec used federal relief funds and support from professional sports organizations such as the Minnesota Twins to waive enrollment fees for ages 10 and older.
The new Parks and Rec positions would focus on mounting maintenance demands, such as plumbing, carpentry, electrical and natural resources, as well as landscaping at the Highland Bridge development in Highland Park, which will include four parks.
St. Paul Public Works would add a single employee, growing from 371 to 372 FTEs. The mayor’s office would drop an FTE, leading to a total staff equivalent of 15 employees, and the Office of Technology Services would drop two, falling to 69 employees.
The mayor’s 2023 budget proposal also includes $100,000 for the interdepartmental Homeless Assistance Response Team, or HART, which meets with the unsheltered homeless at encampments to steer residents to services. The Office of Neighborhood Safety will add $500,000 for wraparound services for gun violence survivors, $25,000 for youth and family trauma support and $177,000 for two community outreach positions.
On social media and elsewhere, owners of multi-family apartment buildings have already begun to question how they’ll shoulder a 15 percent tax levy increase while limited to 3 percent rent increases under the city’s new rent control ordinance. The mayor on Wednesday said he looked forward this year to signing an ordinance amendment that would exempt new construction once it is approved by the city council.
Overall, heavy pushback against the budget proposal from the city council is unlikely. In a brief interview, Council President Amy Brendmoen said the city council has long sought to prioritize core services, from potholes to parks maintenance.
“We will, of course, work our hardest to get the levy numbers down, but what (Carter) initially laid out today seems pretty straightforward,” Brendmoen said. “We share our budget priorities with the mayor before the budget (presentation), and these align with what we asked for — investments in our streets, investments in deferred maintenance and investments in public safety.”
STREET MAINTENANCE COSTS SHIFT
Carter said the other $13.6 million in tax levy spending reflected his office’s decision to move costs for street lighting, street sweeping and seal coating from a fee-for-service or assessment system over to property taxes, which are shouldered by and spread throughout all of the city’s taxable properties.
That decision, Carter said, was all but forced by a series of judicial rulings based on lawsuits against the city over street assessments, the latest coming last May. Ramsey County District Court Judge Robert Awsumb found that the city’s remaining street maintenance assessment program had treated the charges like fees issued to property owners to incur a special benefit when, in reality, he said, they benefit the city as a whole.
“The court finds that the (street assessment) is an exercise of the city’s tax powers,” wrote Awsumb at the time.
The city’s street maintenance program has long been the subject of legal battles waged by churches, nonprofits, owners of street corner properties and others unhappy with allegedly bearing financial costs that other cities spread throughout the tax base. At the end of 2017, the end of then-St. Paul Mayor Chris Coleman’s term in office, the St. Paul City Council approved a 24 percent tax levy increase that was heavily fueled by shifting much of the street maintenance program away from assessments and over to property taxes.
Since then, the mayor’s proposed tax levies have run the gamut. In 2021, Carter called for a 6.9 percent increase to the city tax levy. In 2020, his budget plan called for no levy increase at all. In 2019, the city council narrowly approved a 5.85 percent tax levy increase. Toward the end of 2018, Carter’s first year as mayor, the city council trimmed a proposed 11.5 percent hike to 10.5 percent.
While the cost of seal coating would move to the property tax levy, the city is still working through how to structure its more intensive mill-and-overlay system. Carter’s budget proposal calls for a $4 million annual investment in residential mill-and-overlay, most likely through an appraisal system that charges property owners based on the degree of benefit they receive from the service.
“We are in the process of creating a new comprehensive residential and arterial mill and overlay program and billing policy,” said Lisa Hiebert, a Public Works spokesperson. “We have hired an outside appraiser to help set appropriate billing rates based on a special benefit analysis for benefited properties. This is the same procedure that we currently use for street reconstruction projects, and the same procedure used by many other Minnesota cities for mill and overlay projects.”
In his budget address, the mayor also highlighted the upcoming construction of a new North End community center, where ground will be broken in the fall, the electric car-sharing program that launched this year hand-in-hand with Minneapolis, and the continued park and real estate development at Highland Bridge.
BY THE NUMBERS:
The proposed 2023 total budget is $782 million, an increase of 5.53 percent increase over the adopted 2022 budget of $741 million.
The budget proposal includes a general fund budget of $352.5 million, an increase of $28.3 million, or 8.7 percent over the current year.
The proposed 2023 tax levy is $202.3 million, a $26.9 million — or 15.3 percent — increase over the adopted 2022 tax levy of $175.4 million.
The owner of a median-value St. Paul home ($261,800 in 2023) would likely see a $231 increase next year in their property taxes.
Over the next several years, the city will dedicate $166 million in federal relief dollars to neighborhood safety ($37.6 million), housing ($38.5 million), jobs and career readiness ($43.9 million), modernization of city services ($15.6 million) and financial stabilization ($21.6 million), as well as $9.3 million for grant administration.
INFO: Learn more about the city’s budget process at stpaul.gov/departments/financial-services/saint-pauls-budget.