On Monday, I wrote about the coming hikes to property taxes in Minnesota. What is causing this?
Yesterday, I looked at the pressures coming from federal government action and what we could do to mitigate them short of hiking property taxes. Today, I’ll look at the pressures coming from state government.
Problems
“In Ramsey County, which approved a levy hike of 9.75%, or $38.6 million,” Alex Derosier reports for the Pioneer Press,
…the biggest drivers of expenses were unfunded mandates from the state of Minnesota, employee compensation and “directing resources to our core services and improving our organizational performance,” County Manager Ling Becker said in September.
What are these “unfunded mandates”?
As former Triton Schools Superintendent Craig Schlichting explained in the Dodge County Independent in February:
An unfunded mandate is any policy or requirement that is created by legislation without sufficient funding to cover the cost of implementation.
One example of an unfunded mandate is summer unemployment for hour wage-earners who do not work year-round. For the first two years, the state allocated $135M toward unemployment payments for these staff, which was not enough to cover the projected expense until 2027 as the money has already been estimated to run out before this next summer is over. This will end up costing the Triton School District about $50,000 each year.
Public school employees contribute to the Teachers Retirement Association for all certified and licensed staff. The contribution rate is increasing from 8.75% to 9.5%, with no state aid to help pay for it. For Triton this cost will be about $45,000 each year.
Paid Family Medical Leave will be paid for through an employment tax of 0.7% on wages, with the costs allowed to be shared between the employers and employees. There is no state aid to support this increase for employers. For Triton School District, this increase will cost about $28,000 each year.
There are several new curriculum requirements for school districts to adopt and implement, including personal finance, Civics, Mental Health, Ethnic Studies, Holocaust and Genocide, and Cannabis Use and Substance Abuse. There is no state aid to support the costs of curriculum materials and teacher training. The cost of those could easily reach $50,000 or more.
…
When you start to look at the combined impact of all those mandates and increased expenses as a district, we have no other choice than to cut staff, and to ask the legislature for help. The cost of the mandates for our district adds up to about $300,000, which is not offset by the increases in funding that we received.
In Scott County, which is proposing a roughly 10% hike in property tax levies, Deputy County Administrator Dan Lenz told the Star Tribune that “the county has to cover about $864,000 in higher costs from the state due to the new paid family leave law and changes in social service programs.” This is in addition to “another $510,000 after the federal government passed down more costs, including those related to the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps.”
Solutions
An obvious solution is to ditch these things. Failing that, those who make these mandates legal commitments ought to be responsible for appropriating the funding necessary to finance their provision.
At present, state politicians can have their cake and eat it. Those who passed this tidal wave of unfunded mandates have been able to tout their role in providing paid family and medical leave or unemployment insurance for part time workers, while it has been people at the county level who have been tasked with finding a way to pay for it. The opprobrium for hiking property taxes is falling, unjustly, to a large degree, on them.
If we want to bring property taxes in Minnesota under control, we need to ensure that those who propose expansion of local government spending incur the political costs — or benefits — of financing it. When state policymakers internalize that cost, Minnesota’s hard pressed property tax payers might catch a break.
