7 September 2024
DULUTH — Mayor Roger Reinert will ask city councilors Monday to hold steady on local property taxes for the coming year.
Reinert has proposed the city’s share of local property taxes increase by no more than 1.85% in 2025 — in keeping with the anticipated growth in Duluth’s property tax base.
Councilors will be asked to set the maximum local property tax levy by the end of the month. But the actual tax plan likely won’t be finalized until the end of the year.
Therefore, the odds of a vote Monday on Reinert’s unadulterated proposal remain slim, according to City Administrator David Montgomery, who commented on the budget process Thursday.
Reinert, who is in his first term as mayor, pledged in his “State of the City” address that he would limit spending in the coming year to reflect only new growth in the local property tax base.
While proposing to hold the line on the city’s property tax rate, Reinert acknowledged many residents still will see higher taxes, due to increased property values.
Reinert said residential property values have continued to rise, while commercial growth has been less robust, leading to an increased tax burden on local homeowners and renters.
He referred to the budget he has proposed as an opportunity to give residents “a little bit of a breather.” But he said it also will pressure the city to contain spending as costs continue to rise.
Reinert said the budget also highlights the importance of the city continuing to work to grow its commercial tax base “because the lack of growth there only puts additional pressure on residential taxpayers.”
That concern also drives Reinert to cast a judicious eye on the city’s use of tax-increment financing, a form of tax subsidy that helps developers by using new tax dollars to help underwrite their projects, often keeping large amounts of money off local property tax rolls for years.
“We want to have a reputation of being a good place to do business because that then brings businesses that don’t start by asking what public funding we can contribute,” he said. “We have work to do to get there, but our goal is to be a community where people want to start and grow their businesses because it’s a competitive space.”
He noted the city’s portion of local property taxes accounts for about 27% of the current tax pie, with the county and school district collecting the rest of the revenue.
In the current year, Duluth budgeted about $120 million in general fund spending, including $9 million drawn from reserves.
Reinert’s proposed budget calls for about $108 million in general fund spending.
The mayor said his budget includes the addition of a criminal attorney and a full real estate transactional attorney to the city’s staff; the hiring of a second public-safety specialist at the library; bringing aboard another member of Duluth’s life-safety team; and also increased resources for maintenance work, where spending has remained largely frozen for several years.
Several unknown expenses still lurk ahead for Duluth, including repairs to the Aerial Lift Bridge, required water plant improvements, and large contracts yet to be negotiated with local firefighters and the American Federation of State County and Municipal Employees, the city’s largest union, representing about two-thirds of its total workforce.
Reinert pointed out that including utility operations, the city employs nearly 900 people, working with a total budget of more than $400 million.
He referred to his budget proposal as “a starting point,“ as the City Council begins to weigh its spending options for the coming year.
“This reflects what I clearly heard from taxpayers during my campaign last year. And I suspect that any councilor who was on the ballot last year heard the same thing,” Reinert said, noting that taxation and public safety emerged as key election issues.
“So, I’m not going to predict what the council may or may not do, because administration proposes and the council disposes,” he said, pointing to the value of having checks and balances in the system.
Yet, Reinert expressed optimism the City Council will be receptive to community concerns about the growing tax burden residents have struggled to shoulder in recent years.
Reinert said his budget focuses on “core city services,” which he described as streets, utilities, public safety, parks and libraries.
“Those are the must-do things. Everything else is nice to do,” he said.
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