State Fair, Taxes, and Thanking Public Servants

​Before we get to anything else, let me start with a “Happy State Fair!” Looking forward to the hangover-on-a-stick, and visiting many of you at your booths.  So glad you’re back…
 
Now: on to my thoughts at hand: Mayor Carter’s annual budget address last Wednesday. You can read news articles about it here and here. The proposal reflects a 15.3% increase in the property tax levy. My thoughts? I sent out a snappy tweet last week: “Mayor Carter proposes 7.6% real increase to tax levy. Carter’s proposal outlines real goals – and costs – of growing this capital city. Notable is the irony of rent control cap of 3%; math doesn’t compute.”  On a more reflective note, I found Mayor Carter’s plan to be consistent with his stated priorities. The city has to grapple with the $15M budget deficit due to a lawsuit that made it all the way to the Supreme Court. So, though the city lost the lawsuit, street maintenance costs have been transferred to the general fund.  Not sure who won that one. That takes care of 7.7% of the proposed increase.  The real increase, then, is an additional 7.6% property tax burden for 2023.
 
My reaction? First of all, I’ve got questions in to the City’s CFO on how this 15.3% translates to some sample commercial properties in St. Paul. Second, I couldn’t get over the cognitive dissonance: Mayor Carter said, “same as every family and resident, the work of the city costs more every single year to do.” I agree. The illogical counterpoint is the property owner or housing developer, with rental control in place, who is legally prevented from similarly adapting to this reality.
 
I reviewed the budget proposal highlights:

• 2022’s adopted budget was 15.9% above of 2021 actual.  2023’s proposed budget is 5.5% ahead of 2022.
• 2023’s proposed property tax levy is 15.3% ahead of 2022 (again, 7.7% of that reflects the transfer of street assessments).
• Largest increases by department are:
  • Planning and Economic Development (57.3%);
  • Public Works (52.7%) – Mayor Carter spoke of plans for additional investments in infrastructure, including $4 million for the City’s first-ever residential mill and overlay program;
  • City Attorney’s office (13.4%) – Mayor Carter spoke of additional investments in Office of Financial Empowerment and new staffing around rental control; and
  • Department of Safety and Inspections (10.6%) – Mayor Carter spoke of investments to help clear backlogs and ensure timely processing of an array of commercial and building processes.  

 
Read here for budget proposal highlights, including American Rescue Plan Investments.
 
Finally, an opportunity to thank a public servant:
Do you know a public servant in the East Metro who demonstrates innovation and excellence? Help amplify and celebrate their achievements by completing this brief nomination for the 2022 Leaders in Local Government Awards in September. Nominees from within Ramsey, Dakota, and Washington counties will be selected based on their contributions and innovative initiatives and public policies that advance the public good and demonstrate a commitment to efficient and effective government in various areas of local/county government. If you’ve observed excellence, please take a moment to celebrate it!
 
See you in the trenches.
B

• Governor Walz encounters opportunities and perils in being the incumbent during a crime wave. His declaration: increases in crime in Minnesota “are simply unacceptable.”
• State data tells us: violent crime rose again in Minnesota last year, a trend seen nationwide and one coinciding with the economic and social disruptions of the coronavirus pandemic.​

• The Federal Reserve Bank of Kansas City will host the Jackson Hole Economic Policy Symposium on Thursday through Saturday. Federal Reserve Chair Jerome Powell is scheduled to speak at 10 a.m. on Friday, a speech that will be closely followed for any signals on future rate hikes or quantitative easing and for his outlook on the country's overall economic strength going into the Fed's September meeting. Federal Reserve Bank of St. Louis President James Bullard, a voting member of the Federal Open Market Committee, said he would "lean toward" a 75-basis-point rate hike at the next meeting in September, saying that the idea that inflation may have peaked is "not statistically really in the data at this point." (The Wall Street Journal) Federal Reserve Bank of Kansas City President Esther George, also a voting FOMC member, was more wary, saying the committee has "done a lot, and I think we have to be very mindful that our policy decisions often operate on a lag," adding that the central bank's moves to shrink its balance sheet should also help rein in inflation. (Bloomberg).
• Minnesota employers add 19,100 jobs in July; mixed signals abound. Unemployment held at 1.8% during the same period (nation’s unemployment rate is 3.5%).  DEED’s Grove reafirms: “employers continue to hire at a fast rate.”  
• Mortenson report: Construction costs up 11% - but market indicators point to a potential plateau on the horizon.  
• Meanwhile, home market slows while prices continue to rise. And realtors are saying that July’s year-over-year home sales dropped 25% in St. Paul, but values still ride high.

​Federal

• Inflation Reduction Act was signed into law.  Interested in what it all means? CliftonLarsonAllen has provided a great summary. 
• Very interesting article by Morning Consult: “America has become less liberal, but not necessarily more conservative.” So many of us find ourselves in the “moderate middle.” This is a very interesting analysis.

 
Regional

• Last week Mayor Carter presented his $782M budget proposal for 2023, including a 15% tax levy increase. Of that, 7.7% reflects the transfer of assessment fees to property taxes; 7.6% represents a real proposed tax increase. My initial observation thus far is the irony of an increase due to rising costs and growth goals while rental cap of 3% doesn’t allow for either for property owners.

 
Election season is ramping up. Be sure to reference our East Metro Voter Guide to learn more about your candidates!
 
Subscribe to our Chamber Advocacy Update to keep up with advocacy news.

• Minnesota State Fair is upon us! Aug 25 – Sep 5, 2022.
• From the St. Paul Downtown Alliance: our #LetsGrowStPL campaign isn’t showing any signs of slowing down. Last month the Alliance produced seven original content and lively event recap videos, making over 600k total impressions across our social channels. Take a look back at July’s highlights as we get ready to keep the fun rolling into September! #LetsGrowStPL www.growstpl.com.
• Delta has been named the best U.S. airline by The Points Guy for the 4th year running! Noted are Delta’s excellence in on-time reliability from April 2021 to March 2022, a customer-centered experience, and an extensive global network. Congrats Delta!
• Check out your Chamber’s calendar of upcoming events as well, which include:
  • Federal Reserve update on economic environment, Roseville Business Council: Wednesday, August 24, 2022. Register here!
  • Young Professionals Boat Cruise: Thursday, August 25. Register here!
  • First round of this election season’s Politics @ the Pub: Tuesday, August 30: Register here!

• The employment participation cycle: The Minneapolis Fed’s research team has published a white paper on strategies to monitor unemployment and labor force participation. “Low unemployment does not equal maximum employment if relatively few people are searching for jobs. So in the course of making monetary policy, the Fed has a keen interest in where unemployment and labor force participation are heading.” The Federal Reserve System working paper “Maximum Employment and the Participation Cycle” by Bart Hobijn and Ayşegül Şahin uncovers reasons why participation rates fall during recessions and how/when they tend to recover.
• Having trouble hiring? Here’s how to lure back nontraditional workers – tap into the real desire for flexible and meaningful work.
• Here are all the Minnesota companies ranked on the 2022 Inc. 5000 Fastest-Growing Private Companies list. 78 of them are based in Minnesota.

• As inflation rises, low-income households grapple with particular challenges. In this white paper, low- and moderate-income individuals in the Fed’s Ninth District share their perspectives on increasing prices. ​

• James A. Stolpestad: Recalling St. Paul’s downtown building boom of 1980 – 2000. The final tally for this remarkable 20-year period was 23 separate buildings and over 5M SF of space, including several residential buildings.
• Amazon is starting operations at its new sortation center this week: in Woodbury. The facility will employ around 250 people. Ryan Co. US Inc. developed the 520K SF building in 2021.
• Upcoming workshops seeking public input on housing mix for The Heights development at former Hillcrest golf club.