Metro property tax hikes loom as cities and counties face funding pressure

MINNEAPOLIS (FOX 9) - Property owners across the Twin Cities metro could soon be paying significantly more in property taxes, and even then, some services may still get cut.

Nearly two dozen metro cities and counties are considering higher-than-average property tax increases, with proposals ranging from 2.9% in Eden Prairie to as high as 21% in Dakota County. FOX 9 has been tracking the proposals and what's driving them.

Property tax increases

What we know:

Dakota County is weighing three options for a property tax increase: 21%, which would add about $167 per home per year; 19%, which would add $145; or 16%, which would add $123. Every option on the table includes cuts to staff and services.

The county's financial situation has been building for years. Dakota County's fund balance sat at $130 million in 2014. Over the last 12 years, the county has dipped into those reserves to offset rising costs and budget changes. The projected fund balance for 2026 is just $1.2 million.

"Things that are not necessarily in our control are really putting us in a situation of crisis," said Laurie Halverson, Dakota County Commissioner in an interview earlier this month.

Halverson said federal funding reductions and changes to SNAP and Medicaid requirements left the county shouldering an unexpected $10 million in extra costs next year. To meet new Medicaid work reporting requirements under President Trump's One Big Beautiful Bill, the county would need to hire 70 new employees.

"About 70% of the work that Dakota County does is mandated state or federal services," said Halverson.

The proposed cuts in Dakota County include reductions to county library, parks and public health departments. The county is also considering cutting crisis workers, youth homeless outreach and county corrections officers. AFSCME, the union representing Dakota County workers, said morale among its members is low.

Halverson addressed public concerns about spending directly: "They're asking really good questions. What are you spending the money on? Where can you cut? Are you lean? And I think the county has really good answers to that."

Halverson said, not unlike households, city and county governments are also feeling the squeeze of inflation and high fuel prices.

Jon Lajambe has lived in Eagan for 34 years. "We're just all trying to get by, with the war and everything, trying to make ends meet. Everything's more expensive," Lajambe said.

What's driving the increases:

Experts say the increases aren't happening in a vacuum. The Minnesota Budget Project points to state and federal funding changes that have shifted costs down to the local level.

"We are noticing sizable increases at the local level," said Carly Ekstrom, Deputy Director of the Minnesota Budget Project.

The federal government reduced its share of SNAP administration costs from 50% to 25%, and the new Medicaid work requirements are creating a significant administrative burden for counties.

"Verifying all of that new paperwork and updating the systems in order to implement the first-ever national work reporting requirement in Medicaid is an incredibly large task," said Ekstrom.

At the city level, the pressures look a little different. "The picture is a little closer to the household level," said Ekstrom. "The cost of providing health insurance to city employees, as well as other dynamics like inflation, are bringing up the costs of materials to provide services."

Minneapolis and St. Paul proposals

Dig deeper:

Minneapolis and St. Paul’s mayors have already put forward their proposed budgets, both of which include property tax increases. Minneapolis Mayor Jacob Frey proposed an 11.3% property tax increase, which would cost the median property owner an extra $409 per year. St. Paul Mayor Kaohly Her introduced an $888 million budget that would raise property taxes by 6.8%, adding about $58 for the median property owner.

Both cities already carry the highest effective property tax rates in Minnesota, according to the most recent Department of Revenue report.

The St. Paul budget could mean the closure of the Dayton's Bluff Library and reduced hours at other libraries and recreation centers. The city's police force would also shrink, though Her wants those cuts to come from supervisory positions. Her is also proposing a $20,000 reduction to her own compensation and asking her three highest-paid employees to skip their 2027 cost-of-living raises.

"Leadership starts at the top. That is why I am proposing a $20,000 reduction to my own compensation. And why my highest three compensated employees will forego the 2027 cost of living increase," said Her.

Mayor Frey also proposed reducing the size of the community service officer program and making significant cuts to the violence interrupter program. He noted that current property taxes and values reflect market conditions from 2024. "The property taxes and property values that shape today's budget largely reflect market conditions from 2024, the low point," said Frey.

Not everyone is on board. St. Paul City Council President Rebecca Noecker pushed back on the proposed increase. "I am concerned about hearing a budget that's going to have a 6.8 percent property tax increase. I am hearing from all of my residents, all the business owners in my ward, that affordability is the top concern. Costs are going up in every other way and we absolutely need to bring that down," said Noecker.

Some city council members in Minneapolis are also pushing back, saying the proposed hikes are too high.

By the numbers:

Here's a look at where some metro cities and counties stand on proposed property tax increases:

• Dakota County: 16–21%
• Ramsey County: 8.2%
• White Bear Lake: 12.2%
• Minneapolis: 11.3%
• Wayzata: 11.5%
• St. Paul: 6.8%
• Eden Prairie: 2.9%

What we don't know:

These proposed levy increases are not final. City and county boards will vote on the tax hikes this fall, with final numbers locked in during December. In recent years, final tax levies have typically ended up lower than initial proposals. It is not yet clear which specific services will ultimately be cut or how much the final property tax increases will be after council negotiations and public hearings.

For Dakota County, staff are holding community information sessions to answer questions and explain the options. Two more open houses are planned:

• Thursday, Sept. 10 from 5–6:30 p.m. at the Western Service Center in Apple Valley
• Tuesday, Dec. 1 from 5–6 p.m. at the Administration Center in Hastings