Property taxes are rising across Minnesota. Ramsey County officials are proposing increases in the property tax levy of 9.75% in 2026 and 7.5% in 2027. In Willmar, the preliminary 2026 property tax levy is approximately $12.8 million, an increase of approximately 15% from the adopted 2025 property tax levy. St. Louis County has announced a maximum tax levy of over $202 million, a 12.4% increase over 2025.
Why?
The simple explanation for these property tax hikes is that local government spending is increasing, but what is driving that?
The three drivers in Ramsey County are unfunded mandates from the state, employee compensation, and “directing resources to our core services and improving our organizational performance,” according to County Manager Ling Becker.
In Willmar, part of the hike is to pay for capital improvements, but Mayor Doug Reese also cites rising operating costs, such as salary and insurance increases for Willmar’s 109 employees, the “men and women who maintain our parks, plow our streets, protect our neighborhoods and respond to the emergencies. Investing in them means investing in the quality of life we all enjoy here in Willmar,” he explains.
St. Louis County explains that the increase is linked to staff salaries, as well as rising healthcare costs — the county currently employs over 1,900 people — as well as infrastructure spending and a reduction in state and federal revenue sources.
Government staff costs
In each of these cases, the rising cost of government employees is given as a factor in the rise in budgets and property taxes. Indeed, it is the only cause given by all three.
The Duluth News Tribune carried an op ed this weekend by Jon England from our friends at the Libertas Institute titled “Powerful and political, public unions drive up taxes.” “While private-sector unions negotiate with employers who must balance labor costs with business survival,” he notes:
…public-sector unions operate differently. Instead of dealing with business owners, they deal with politicians — many of whom receive campaign funding from these unions. This creates a self-reinforcing cycle: unions fund candidates who, once elected, approve generous contracts that benefit unions, not taxpayers. Unlike in the private sector, where a company can go out of business if it overcommits to labor costs, governments simply raise taxes to cover inflated salaries and pensions.
“The pattern is clear,” England argues, “The more powerful public-sector unions are, the higher the tax burden on working citizens.”
I have previously noted the phenomenon of “Baumol’s Cost Disease,” in which wage increases in a sector with increased labor productivity drag up wages in sectors without those increases, like the government sector. This is a very real pressure on government budgets at every level, and would be even without government sector unions. This, though, makes it all the more important that governments act to restrain spending when they can.
