Homeowners in some of St. Paul’s most economically challenged neighborhoods could see an increase in property taxes ranging from 8% to 16% next year. This rise will depend on the final figures approved in December by the city, county, and school district.
In addition to a projected $125 increase in water, sewer, and recycling fees, the overall fees for residential property owners in areas like Thomas-Dale/Frogtown, Payne-Phalen, North End, and West Side Neighborhoods may go up by around $600. Homeowners in Hamline Midway, Bluff, Como, and Summit University are also likely to experience similar increases.
Residents in St. Anthony Park, Battle Creek, Sunray, Highwood, and downtown St. Paul are expected to see their property taxes increase minimally but still face notable hikes, often amounting to hundreds of dollars.
Tax Burden Shift
Tax burdens are reportedly shifting from commercial properties to residential ones, according to Madeline Mitchell, budget manager for the city. This shift has not gone unnoticed by local officials, with concerns about the potential massive tax hikes for struggling homeowners.
“There are individuals in my ward who are barely making ends meet, yet they manage to pay their bills on time,” remarked Hu Jong Kim, Vice President of Congress, who represents the North End.
The Joint Property Tax Advisory Committee, which includes officials from the city, Ramsey County, and the St. Paul School District, held discussions on tax trends and how to improve tax collection as of Monday.
Taxation Details
The actual maximum tax amounts are still uncertain. The St. Paul School District is waiting for guidance from the Minnesota Department of Education regarding its allowed tax increase. Moreover, voters will face a special funding question in the upcoming election, seeking approval for a $1,073 increase per student for a decade starting with taxes in 2026.
If this measure passes, it could mean an additional annual cost of $309 or around $26 monthly for homeowners with a median property value of $289,200. The proposed tax could also increase due to inflation.
With rising costs and a lack of adequate state funding, the district currently faces a $51 million budget deficit, prompting cuts to reserves and programs. Simultaneously, the city aims for a 5.3% tax levy increase, while Ramsey County is looking at a 9.75% rise.
Revenue Distribution
Approximately 35 cents of every dollar collected from taxpayers will be allocated to Ramsey County, with 33 cents going to the city of St. Paul and 23 cents to St. Paul Public Schools. The remainder will fund various special tax authorities.
Current Trends
During the advisory committee meeting, key trends affecting property taxes were discussed, including:
Employment Reductions
In an effort to reduce costs, Ramsey County plans to eliminate 43 positions, while St. Paul is implementing a hiring freeze for most open positions. The St. Paul School District has let go of over 140 full-time staff positions as part of its budget plan for 2025-2026. Without additional funding, further cuts may be necessary next year.
State and Federal Funding
Officials indicated that adequate state funding could significantly benefit schools, suggesting that if inflation adjustments had been made over the past two decades, the district would receive an added $50 million annually. However, federal funding appears uncertain, and cuts to social services could impose additional financial burdens.
Shifting Property Values
Currently, commercial property values in St. Paul are not rising as quickly as residential ones, a trend that will influence property taxes next year. Overall market value growth is about 1.5%, and Mayor Melvin Carter’s budget proposal suggests $5 million to convert downtown office spaces into housing, among other initiatives. However, there are calls for more substantial investments to alleviate the tax burden on homeowners.
Declining Birth Rates
Concerns arose regarding declining enrollment in the school district. Recent demographic trends indicate that births have dropped, affecting the number of students and thereby applying financial stress on the district. This shift may lead to increased property taxes as districts look to balance budgets with fewer state funds available per student.
Non-Taxable Properties
Officials emphasized the need for dialogue on growing the city and county tax bases, particularly regarding non-taxable properties that still require public services. Roughly 14% of Ramsey County properties are tax-exempt, including government and nonprofit facilities, contributing to the financial strain on taxpayers.
