St. Paul City Council sends two tax referendums to voters

The St. Paul City Council on Wednesday signed off on a pair of ballot measures that will ask voters to approve millions of dollars in tax increases for street maintenance, park upgrades and early childhood learning programs.

The first of those questions will be posed to St. Paul voters in November. The city is seeking a 1% sales tax increase, which would collect nearly $1 billion over 20 years for improvements to roads and parks.

Voters will see the second question in the fall of 2024, when they'll be asked whether the city should increase its property tax levy to cover the costs of child care for low-income families.

Neither received unanimous approval from the council. Mayor Melvin Carter, who has led the charge for the sales tax plan, said he has "significant concerns" about the child-care measure.

In response to questions about the proposal, he said in a statement: "While I appreciate the ambition behind this well-intended initiative, the city's focus should remain on meeting critical needs like repairing roads and caring for individuals experiencing homelessness, which have gone under-resourced for far too long."

Sales tax to voters

Carter pitched the sales tax as a way for visitors to help bear the costs of maintaining the capital city's streets and parks. The city received state approval this session to put the question before voters.

"We have a unique opportunity to make an exceptional investment in our city's roads and parks, providing future generations with sound infrastructure," the mayor said in a statement. "We look forward to bringing this conversation to our residents."

For years, city officials have raised alarms about deteriorating street conditions, saying St. Paul would need an additional $29 million each year to meet benchmark pavement standards. Current leaders say a mix of factors is to blame: Local government aid from the state has not kept up with inflation; previous administrations did not raise the property tax levy for more than a decade; and about 20% of St. Paul land is exempt from property taxes.

Many critics agree that St. Paul's streets need major work, but they question whether a sales tax is the right funding mechanism. If the proposal passes, St. Paul would have the highest general sales tax in the state at 9.875%, said Amanda Duerr, vice president of government affairs for the St. Paul Area Chamber of Commerce.

"Along with being a regressive tax that will impact those least able to afford it the most, an additional sales tax increase would make St. Paul a regional outlier," Duerr wrote in a letter to the council. "Those who have the mobility to do so will likely opt to do their shopping in neighboring communities, negatively impacting St. Paul businesses."

She and others also argue that the wording of the question — which says improvements will be funded "primarily from increased property taxes" if voters nix the sales tax — misleads voters about possible funding alternatives.

Council Member Jane Prince cast the lone dissenting vote on the measure "because of a lot of concerns I have going forward, and concerns about the due diligence the city has done on determining what the impact is going to be on local business."

"This may not be the best way to fund it, but it's the best way I've heard," Council Member Chris Tolbert responded. "I think that we should put this forward and let the voters have this conversation."

Child-care vote in 2024

The council's 5-2 vote Wednesday marks a significant step in a yearslong city effort to help cover the costs of child care. Supporters say federal and state funding for child care repeatedly falls short, arguing that filling the gap locally will benefit kids' brain development and parents in the workforce.

As written, the ballot question will ask voters to authorize the city to raise the property tax levy incrementally each year for 10 years — $2 million the first year, $4 million the second year and so on, until the program maxes out at $20 million.

The fund would cover the cost of care for children ages 5 and under for families at or below 185% of the poverty line, which is $55,500 annually for a family of four. Other subsidies would be distributed to families on a sliding scale.

Additional money would go to "support for providers to expand capacity, ensure competitive pay and benefits, and/or access professional development opportunities," according to the council resolution.

All seven council seats are up for election this fall, and the council has the power to change the resolution at a later date. Council Members Mitra Jalali and Russel Balenger voted against the measure.

"What I believe we should be doing is using our annual budget authority … and doing things like improving inequities in existing early learning programs, looking at ways that we can partner with Ramsey County and/or St. Paul Public Schools," Jalali said.

Still, advocates celebrated the step forward as a win. Halla Henderson, a St. Paul school board member and chair of the proposal's campaign board, said in statement: "We can lead the way and show the rest of the state that a small public investment in our kids will help every family thrive."

Council Member Rebecca Noecker, a lead advocate for the proposal, said holding off on the ballot measure until 2024 gives policymakers more time to gather feedback and will likely mean higher voter engagement due to the presidential election.

2023 ballot question:

Should the City of Saint Paul establish a one percent (1%) sales and use tax over the next 20 years to generate $738,000,000 to repair and improve streets and bridges, $246,000,000 to improve parks and recreation facilities, and associated bonding costs?

A vote YES means that these costs would be funded through the new one percent (1%) sales and use tax. A vote NO means that the majority of these costs would be funded by other local revenue sources, primarily from increased property taxes.

2024 ballot question:

In order to create a dedicated fund for children's early care and education to be administered by a City department or office that provides subsidies to families and providers so that early care and education is no cost to low-income families and available on a sliding scale to other families, and so as to increase the number of child care slots and support the child care workforce, shall the City of Saint Paul be authorized to levy property taxes in the amount of $2,000,000 in the first year, to increase by the same amount each year following for the next nine years ($4,000,000 of property taxes levied in year two, $6,000,000 in year three, $8,000,000 in year four and so on until $20,000,000 of property taxes are levied in year ten)?

BY VOTING "YES" ON THIS BALLOT QUESTION, YOU ARE VOTING FOR A PROPERTY TAX INCREASE.

The maximum amount of increased levy as a percentage of market value is 0.006% in year 1 and estimated to be 0.060% in year 10. The amount that will be raised by the new referendum tax rate in the first year it is to be levied is $2,000,000.