The case for investing in early childhood is compelling, but St. Paul’s property taxes aren’t the answer – Twin Cities

St. Paul voters face a critical decision in the November election: whether to approve a mandatory property tax increase over the next 10 years to fund early childhood care and education initiatives. While I believe the intent of this ballot measure is commendable, its implementation raises serious concerns regarding the prioritization of pressing municipal issues and fiscal responsibility.

As part of my due diligence, I spent a lot of time researching this initiative. The importance of this topic requires serious consideration. I listened to a presentation from the city council in September of this year; I read the 48-page report summarizing the plan and reviewed reviews of both the needs and proposed financial projections; we invited Councilman Knocker (plan sponsor) to present the program at our Public Affairs Forum; I spoke with Art Rolnick, whose professional work in economics and early childhood development (and his support for this program) is very well known and respected. I agree that investing in our children is critical to our future. And at the same time, I cannot support the proposed program.

At the heart of the proposal is a commitment to levy $2 million in property taxes in the first year, increasing by $2 million each subsequent year until it reaches the $20 million levied in year 10. It is my understanding that the estimated cost of managing this initiative may significantly exceed last year’s revenues. And then what?

Prioritization

I have to agree with Mayor Carter that he does not support this ballot measure.

Mayor Carter vetoed the bill in July 2023 (the City Council later overrode the veto) due to his own concerns: one of which was that no office or department in St. Paul could “sensibly and effectively take over this amount of work.”

He estimates that building the infrastructure will cost millions of dollars. He made it clear that not enough money would be raised to administer the program. And the city lacks the government structure and capacity to take on this new mandate.

At the September 2024 City Council meeting, Council President Jalali said she was “very concerned about the City playing any larger role in addressing this issue.” She went on to say, “Our role should be to help other agencies and providers access the funds they need.”

Fiscal responsibility

We absolutely have to take context into account. This may be the worst time for another tax hike.

St. Paul faces extraordinary challenges in the current fiscal climate with rising tax increases and a shrinking tax base. This would be in addition to a proposed citywide 7.9% levy increase for 2025, a 4.75% Ramsey County sales tax increase, a new city sales tax and a new 1% St. Paul sales tax. Increasing the financial burden on residents and businesses to fund a program that lacks a robust long-term plan only complicates the city’s already precarious budget situation.

Moreover, as the city of St. Paul faces a $19.4 million inflation challenge, akin to a 10% increase in property taxes, there is growing concern about the sustainability of further tax increases.

The city’s main source of income is commercial real estate. And this sector is under threat. The value of many buildings in the city center is declining. Consider, for example, the St. Paul Athletic Club, which recently failed to sell at auction with a starting price lower than the cost of its construction in 1915. Or River Park Plaza, where assessed values ​​have fallen 42.3% this year.

This trend threatens to further erode the tax base, and there has been no research or discussion on how this decline in commercial property values ​​and its impact on the city’s budget will impact the increases needed to fund the proposed program.

Convincing data, but not true

I have to say that the evidence supporting investment in our children is compelling.

The Legislature agreed last year and authorized funding for an expanded child care plan. However, addressing early childhood care and education is more than any single city can manage or fund through property taxes. And the city of St. Paul is already overburdened with funding and meeting its immediate responsibilities—improving infrastructure, ensuring public safety, serving the homeless, improving existing parks and recreation facilities, and revitalizing commercial areas.

Given the above, I believe it is financially irresponsible to support the program as presented. Voters in St. Paul should carefully consider the implications of approving an automatic 10-year property tax increase given the highly uncertain tax climate in the near future.

I encourage you to vote “no” on the first question.

B. Kyle is the President and CEO of the St. Paul Area Chamber.