Duluth sets 1.85% max property tax levy for 2025
DULUTH — The City Council unanimously voted to support Mayor Roger Reinert's property tax proposal Monday night.
That proposal will limit the growth in the city's levy to no more than 1.85% in 2025. This figure represents the amount that new construction has added to the local property tax base from 2023 to 2024, and Reinert says it will mark the first time since 2014 that the city has essentially held tax growth to 0% for owners of existing properties.
Reinert noted that the city's share of local property taxes constitutes only 27% of residents' tax bills, with another 26% going to support the school district, 41% for the county and the remainder going to various other smaller taxing authorities.
He said that 83% of the city's spending pays for staff wages and benefits, observing: "We are in the people business."
Reinert also noted that property taxes are not the city's only source of revenue, with a local sales tax and local government from the state accounting for a combined 74% of the budget.
Nevertheless, the first-term mayor acknowledged city property taxes have become an increasing burden, especially with local home values growing by 48% in the past five years, according to the Duluth Realtors Association.
"Residents are feeling squeezed, and they asked for a breather," Reinert said, stressing his commitment to fulfilling a campaign promise.
However, he said that residents should not expect repeat 0% increases in future property taxes as the city's expenses continue to grow.
"We have the same inflationary and wage pressures as every other organization out there," Reinert said. "And if you need proof, just look at what our peers are doing."
He pointed out a proposed 9.96% levy increase in Rochester, 8.1% in Minneapolis, 7.9% in St. Paul and 11.1% in Bloomington.
"So, I predict we will continue to have difficult budget conversations between wants and needs and must-dos."
In an effort to contain costs, Reinert initially proposed the city discontinue $600,000 in annual funding to support a Mobile Crisis Response Team operated by the Human Development Center. This team responds to people experiencing mental health issues, coping with addiction and those experiencing homelessness.
But in response to a community outcry to continue the program, city councilors and the mayor's administration arrived at a plan to provide one-time support for it in 2025, drawing primarily on tax-increment financing funds the Duluth Housing Redevelopment Authority stands to recover after discovering an error in collections from the Hawk Ridge housing development.
At large Councilor Lynn Marie Nephew, who also serves on the HRA, was credited for suggesting this work-around that shouldn't affect the proposed 2025 property tax levy.
As a local Realtor, Nephew said she shares Reinert's concerns about the levy.
"In my professional life, I see people who are getting taxed out of their homes. So, a year of relief, I think, is really important," she said.
For his part, 2nd District Councilor Mike Mayou said that in the three years the Community Response Team has been operating, its members have demonstrated the "immense" value of the program, "when we look at how taxed our health care system is, the number of people that are utilizing emergency services and the number of people who just need support."
"Our community needs this program. I think we've said that very loudly and clearly," said Mayou, suggesting that the city should have a stake in providing long-term funding for it.
