Hodges Shepherds Through 2012 Property Tax Relief Fund

The Minneapolis City Council unanimously created a special fund Friday to help pay down property taxes in 2012.

The proposal was shepherded along by Ward 13 Council Member Betsy Hodges. It transfers $2.8 million in supplementary funds from the city’s street paving program to pay for the Property Tax Relief Account. The regular budget for street paving programs and infrastructure improvements are still in place.

Hodges told Patch that this initial funding would reduce the overall tax levy by about one percent. She said that more money could be added to the fund if it becomes available from other areas. “As we find one time dollars it allows us to weigh any proposed uses for those one-time dollars against property tax relief,” Hodges said.

Hodges said the city hasn’t established a fund like this to pay down property taxes before. The city predicts that property tax demands will continue to grow in 2011-2012, although it will slow in 2013 (see PDF).

“Using one-time dollars to buy down your levy is not something you want to try and do on an ongoing basis,” Hodges said. “It’s a strategy to help manage a big problem; It’s not a solution for a big problem.”

The City Council also adjusted its contingency plan for possible Local Government Aid cuts. It prepares for up to $28.1 million in reductions from the city’s certified aid of $87.5 million (see PDF). If aid is cut deeper than the governor’s proposed budget, cuts will cascade through 16 areas, with the Property Tax Relief Account being the twelfth area impacted.

“It also makes very clear to folks at the legislature that what they’ll be doing is raising taxes in Minneapolis if they cut our Local Government Aid to that degree,” Hodges said.