Legislation would cap levy increases for cities

Kasson City Administrator Tim Ibisch briefed the city council earlier this month on a proposed bill that would create a levy cap for municipalities.
“This week, Republican lawmakers in the Minnesota Senate unveiled a package of tax relief bills — among those pieces of legislation is a proposal from Sen. Michael Kreun that would blunt the rapid pace of property tax increases,” Ibisch wrote in his report.
The bill was formally announced on March 23.
“Under Kreun’s proposal, any locality with a population greater than 2,500 would not be allowed to raise its property taxes beyond the rate of inflation plus 50% of population growth. For example, if the rate of inflation is 3%, and a locality’s population grew by 1%, then that jurisdiction could impose a maximum property tax increase of up to 3.5%,” Ibisch wrote. “If that jurisdiction wanted to increase property taxes beyond that amount, Kreun’s proposal would require that locality put the matter before the public for a vote.”
Ibisch explained that the current law “already requires local school districts to gain public approval before they adopt a property tax increase.”
“Kreun’s bill would require all of Minnesota’s major population centers to get public approval before implementing a larger property tax increase. Additionally, Kreun said, addressing property taxes will require a restriction on property tax increases and a pause on new mandates issued to local governments,” Ibisch said. “He noted that Senate Republicans are committed to pausing new mandates on local governments. We’ll have to see if this gets any legs, with a divided legislature, I think it’s unlikely this year.”
Ibisch explained that Iowa has been under levy limits for two years. He said Iowa communities are still increasing spending but are using one-time transfers from enterprise funds—such as sewer and water funds—which are supposed to generally be self-sustaining.
Ibisch said unlike some communities with limited growth, Kasson is growing at a faster rate.
“Thankfully, we’re growing at a rate that allows us to see some increases without having that affect property taxes as much,” he said.