The Difference between the Tax Levy and Taxes Levied and Why Wellstone was Right

24 Feb

The city budget negotiations this year sparked a public conversation about city finances and the details of budgeting. There was one piece missing, however, from the public conversation. It is the difference between the tax levy and the taxes levied. The former is the targeted budget set by the city. The latter is the method to reach that target. The difference between the two does make all the difference.

First, the levy. Each year the city sets a budget. The city decides how many new firefighters the city will hire and the number of bike lanes built. The city adds up all the services and infrastructure improvements to arrive at a grand total, the budget. The city then must raise the funds for that budget. Some of it comes from state and federal dollars and the largest share being from user fees (like garbage and recycling).  Another major source of funding is property taxes. That’s called the tax levy. It is the total amount of money set to be raised by the city through property taxes in a year. It is one big number; in 2014 it was $281.7 million. The tax levy does not tell us about how and from whom the funds will be raised. It is simply the total amount to be raised by taxing the value of all properties in Minneapolis. Ok, that’s the tax levy.

Next, the taxes levied. Once the budget is decided and the tax levy set (the total budget), taxes are levied. The taxes levied on an individual property do not rise at the same rate as the tax levy; this is true for a couple of reasons*. First, new properties can be built in the city which increases the value of the total property in the city. This in turn lowers the taxes levied on each building, new and old. The second reason, the relative value of individual properties can change within the city. The effect of each on taxes levied will be explored in turn.

The construction boom in 2014 can help explain the first case. Throughout the city thousands of buildings were built. New single family homes, office buildings and apartment towers were built, totaling $2 billion dollars in value. This is a 2.4% increase in value of property in the city from the year before.Property tax distribution 2015 This means there is that much more total property value which can share the cost of the tax levy. It is part of why 56.7% of property owners who have not made improvements to their home will see a decrease in the taxes levied on their property. The same thing can also be explained with a couple bags of M&Ms.

Imagine you have 4 friends; 3 friends each have a one bag of M&Ms and the 4th with no bag. Your friend without a bag of candy could use some cheering up, so you each offer him 20 M&Ms, 5 each from you and your 3 friends. Along comes another friend, Felicia, who has a bag of candy too. She offers to also donate some M&Ms. Now with 5 friends, each person only needs to give 4 pieces. Sharing becomes easier with more friends.

Back to cities and not candy. When new buildings are built there is new value added to the city. This reduces the proportional contribution of property taxes by already existing properties. This means that when the whole city does better, we all do better.

Not all properties will see a reduction in taxes levied, however, because the amount of taxes levied also depends on the distribution of property values. Let’s return to the M&Ms. In the above example all the friends had the same sized bag of candy. Suppose instead one friend had a king sized bag as large as the other bags combined. That friend could have donated half the needed M&Ms. Property taxes are similar. The relative contribution of the value of a property to the city’s total also influences the taxes levied. Suppose the tax levy stays flat; from year to year the city needs to collect the same amount of money on properties in the city. A change in the relative value of a property will change the taxes levied on that property. If the value of a property grows slower than the city average, its relative value goes down and its taxes levied would go down. If the value of a property grows faster than the city average, its relative value goes up and its taxes levied would go up. This shows that sharing prosperity means we can share in the support of the city.

It is the interaction between these factors that show the wisdom of Wellstone’s old adage that “We all do better when we all do better”. We all live better when we expand opportunities so more neighbors can share our sidewalks. New neighbors and new homes spread the cost of the city to more people. We all live better when inequality is reduced because we can all contribute to the city we love. Our city does better when we all do better.

*There are many reasons, but these often only cover a small number of properties and are not part of the larger trends.


To have our carrots and eat them too

23 Nov

Those of us fortunate enough to live in Linden Hills live here because we love the small town feel of the neighborhood. We love having Wild Rumpus for the kids to find a book, we love having the Co-op close enough to walk and shop, and we love having Zumbro’s to take our families to on Mother’s Day.

It’s also clear many people are partial to a glass of wine on the benches at Tilia’s. The synergies from the density of businesses help each business grow. (If you give a kid a toy from Creative Kidstuff you might have to buy her a scoop of ice cream from Sebastian Joe’s.)

 The cluster of businesses exists, too, because of the synergies from the density of people. There are 2,217 single family homes in Linden Hills with an additional 1,061 multifamily units. These apartments, condos, and townhomes surround each of the business nodes providing additional neighbors and customers. Their density helps make the commercial nodes possible. We elected Betsy Hodges who called on Minneapolis to increase our population by 20 percent. We need increased density to improve the financial health of the city, to support efficient public transportation, and to grow our local food system.

If someone chooses to live on the fringe of the metro instead of Linden Hills, they are building on what was previously farmland. We love the local food at our farmers market, but those farmers will be pushed further afield without increased density in the city. Let’s support 20 percent more neighbors so we can have our carrots and eat them, too.

A Living Wage for Student Success

13 Apr

Minneapolis needs a living wage. Each year thousands of students graduate from Southwest, Washburn, Edison, and all the Minneapolis schools. Each year many of those students reach for their future and head to college. Some come from families fortunate enough to not need loans; most do not. As difficult as navigating the challenges of finding and attending college, it is even more difficult to navigate scholarships, student loan offices, and high interest rates. This difficulty is real. Minnesota students have some of the highest levels of student loan debt in the nation. Students are working 2 or 3 jobs to try to pay for their brighter future.

As kids we were told the stories of our parents or their peers working their way through college. We see them as role models and strive for success in the same way. The world is no longer the same. In 1980 the minimum wage was $3.10. In 1980 tuition at the University of Minnesota was $927. Working about 10 hours a week during the school year a student could earn enough money to pay for tuition*. This year’s tuition is $12,090. With the minimum wage bumped to $9.50 it would take a student 42 hours a week during the school year to pay for tuition. It is no wonder that student debt is piling up.

Raising the wage to $15 helps return into the realm of the possible the dream of working for a better education. At $15 an hour it would take a student 27 hours a week to pay for tuition; still a stretch, but possible. Declines in real wages and higher tuition costs have squeezed the Minnesota Miracle. It’s time to give families and students a raise. Won’t you support our students’ futures?

*The math used to calculate the weekly hours. $927/($3.10* 30 school weeks)= 10 hours a week. $12,090/(9.50*30 school weeks)= 42 hours a week. $1,090/($15* 30 school weeks) = 27 hours a week.

New Ulm: The Urbanists Utopia

24 Jan

Much of the political rhetoric about urbanism has become the MSP metro area vs. Greater Minnesota. This is a bad argument to make because in fact many of the small towns in Minnesota have better urbanism than many places within the metro. It is often from the Main streets of small towns that urbanists gain valuable insight. Today I am s profiling New Ulm to provide an example of an urban small town. Using the Longitudinal Origin-Destination Employment Statistics dataset from the Census Bureau I measured the employment and housing patterns within New Ulm.

With a population of 13,522 it features an intact main street, a college (Martin Luther), a brewery (Schells), a river, and downtown parks. Quite a list of an urbanist’s favorite things! Another impressive aspect of New Ulm is the larger number of people who both live and work within New Ulm.

H2W_NewUlmThe first map shows the job locations of workers who reside within New Ulm. Some of the workers who reside in New Ulm work in one of the many other small towns surrounding it. However, 63% of the 6977 New Ulm workers work in New Ulm. For a town that is only a couple square miles it means a large majority of residents could walk or bike to work. The southern area that is red is a more industrial area. The area in the middle of the map is downtown. Educational and medical facilities are represented by the large orange census blocks on the west side of town.


This second map shows the home locations of all employees of jobs located within New Ulm. This map shows a reciprocal of sorts of the first map. Instead of job locations of workers, this map shows home locations of jobs located within the W2H_NewUlmboundary of the town. As expected the areas outside of downtown are the major residential areas. 45% of the 8,184 jobs located within New Ulm are filled by residents of New Ulm. Most of the census blocks are relatively dense. These are the traditional city blocks that make up almost all of the city. The large yellow blocks on the western side of the city are newer developments that are the only traces of “suburbia”. They are also less dense likely because those blocks are also where the hospital and college grounds are located.

What becomes clear in this analysis is that the ideas of urbanism is not metro vs greater MN. Instead it is about a land use that works better for people and communities.

Palmisano should budget by our values

15 Dec

We all love living in Southwest Minneapolis. We love the strong sense of community that means three conversations while waiting for the concert to start at the band shell. We also love the high quality schools that produces top notch students and top notch theater.

We also love living in a progressive city that lives its values. It is why we elected Betsy on a platform of One Minneapolis. Which leads us to the city budget.

Councilwoman Palmisano has been put in what looks like a bind. She ran on a platform of stabilizing property taxes. Middle class and fixed income residents of her (our) district are asking her to help them stay in their homes and age in place by keeping property taxes in check; they have gone up because of million dollar homes and increases in the property tax levy. On the other hand she was elected in a wave of elections by city residents demanding serious action and investment towards ending the racial and economic injustices that hold back our city and all of its residents.

How does she best respond?

Councilwoman Palmisano should guide her decision on what we love about our neighborhood. She should channel our neighborliness and desire to stay here forever to advocate for a reallocation of senior housing investments towards Ward 13 so more seniors have the dignity to age in the city they love. She should channel our pride in our schools and teachers to advocate for affordable family housing investments in Ward 13 so more families have the opportunity of great education. This is one way to prioritize equity and meet her constituent needs.

The budget is our values in actions. Let us make them real.

Elliot Altbaum

Midtown Corridor: A Grade Separated Central Corridor

17 Oct

The Midtown LRT/Streetcar has joined the growing number of high efficiency corridors planned for the Minneapolis, St. Paul metro area. The Midtown LRT/Streetcar will run on the Greenway rail trench from the planned SW Green line station at W Lake Street to the Lake St station on the Blue line. Though the transit in the greenway is being classified as a streetcar, the fewer stops and connections to both the Green and Blue line means that it will function more as a light rail. It will be paired with Bus Rapid Transit (BRT) on Lake Street that extends all the way to St. Paul. It will connect with some of the busiest north-south corridors: Green Line, Hennepin, Lynndale, Nicollet, Red Line BRT on 35W, Chicago Ave, and the Blue Line. This route would also serve some of the densest areas in the region. Outside of the two downtowns, this is the east-west route with the most job and housing density.

Map: "Midtown's density will be key to it's sucess"

Because of the dual corridors of the Greenway and Lake Street, the route could be built in stages. BRT involves much less physical infrastructure and capital to develop so it could be built first. As funding becomes available, the LRT/streetcar can be built. After the Central Corridor, this is the next best rail investment that the region can make because it connects the densest housing in the state with job centers while also connecting neighborhood amenities.

This corridor has proven its viability through the high ridership of existing bus routes. This is an important future transit planning point. If we only build a train line every 8 years (6, if we’re hopeful), then each line must be done right to maximize our investment. Current ridership on existing local and express bus lines should be an indicator for which routes would most benefit from the expanded service or rail. Besides improved service, an expanded bus system generates insightful rider information, further honing long range transit planning.

The Midtown corridor has proven itself as a successful bus route that merits additional investment. it is included on the Met Council’s 2040 transit plan, the TPP. Let’s make sure that this corridor receives more attention and moves up the list of planned routes.

Sharing Like a Capitalist

15 Oct

The sharing economy has received lots of media adoration over the last couple of years. A closer look reveals a more troubling truth. There are various types of companies in this new economy, but the ride-sharing companies like Uber and Lyft provide a useful example. In a recent article, Avi Asher-Schapiro details the effects of this model on the workers.

Uber entered cities with great fanfare. They said that they had a ridesharing system that would be cheaper for the consumer and better for the drivers. At the beginning, Uber charged costumers a fare of $2.75 per mile (with an additional 60 cents per minute under eleven mph). With drivers keeping 80 percent of the fare, it was possible to work full time and make a $15-$20 an hour. This is what prompted the media to declare ride-sharing a success; workers were making a living wage and it was cheaper for the riders. This did not last.

Within the last year, rates have been cut to less than half of the earlier ones. With the drivers having no control over the fare price, Uber slashed rates to $1.10 per mile, plus 21 cents a minute. This has left the drivers with significantly less cash for the same amount of work. Now drivers struggle to barely make minimum wage.

Drivers are fighting back. Working with Teamsters locals, the drivers have started their own drivers associations. Because Uber treats each driver as a “partner-driver” the drivers are independent contractors. This makes forging unity among the workers more difficult. Nonetheless, strikes and protests have happened in Los Angeles, Seattle, New York City, and others. It is not going to be easy; Uber has raised $1.5 billion from tech investors in Silicon Valley and they want to make a lot of money.

Asher-Schapiro’s conclusion of the new sharing economy is damning:

[U]nder the guise of innovation and progress, companies are stripping away worker protections, pushing down wages, and flouting government regulations. At its core, the sharing economy is a scheme to shift risk from companies to workers, discourage labor organizing, and ensure that capitalists can reap huge profits with low fixed costs.
There’s nothing innovative or new about this business model. Uber is just capitalism, in its most naked form.

New technology and the economies it creates can be a force for bettering people’s lives. As progressives we need to raise our voice to ensure that it works for everyone.


This post first appeared a MN2020