As people ask me questions about the BET and about my campaign, I will share some of the most interesting or common questions along with my answers.
Q. What is the role of the BET?
A. The BET is a board established by the City Charter to set the maximum property tax levy for certain Minneapolis tax funds, including the City, the Park Board, and the Public Housing Authority. The Board also approves the issuance of municipal bonds. The BET is functionally a fiscal oversight board. It has members that are stakeholders with distinct interests in the City’s tax levy and other authorized revenue sources, ensuring that no single represented interest or entity has exclusive control over the issues subject to its jurisdiction.
Q. Who are the members of the BET?
A. “(1) the Mayor; (2) the Council president; (3) the Council member who chairs the Council committee whose charge includes the budget; (4) a commissioner elected by and from the Park and Recreation Board (or, if the Park and Recreation Board has not elected a commissioner, its president); and (5) two members elected by the voters in a regular election held in each year following a year whose number is evenly divisible by four.” (Mpls. Ord. No. 2016-086 , § 5.)
Q. Can you explain how a property tax works?
A. First, check out how the City of Minneapolis explains it:
Property taxes are determined by
- Determining how much to collect, and then
- Allocating that amount to be collected among the various classes of properties within a jurisdiction, using property-class weighting that is determined by statute (the “classification rate”). (Minn. Stat. § 273.13.)
Property classes correspond to different types of uses, such as residential, commercial, etc.
The tax on an individual property is calculated using property’s appraised value relative to other properties in the jurisdiction, after that value is adjusted by applying its classification rate. Adding properties that are subject to property tax (e.g., adding residential units) decreases every other property’s relative share of the overall levy because the same tax is being spread among more payers.
If you found that explanation unhelpful, experimenting with our property tax levy simulator can let you see how it works, in action!
When considering the tax-revenue mechanisms available to the city, property taxes are the least regressive. (see 2021 Minnesota Tax Incidence Study, pp. 33, 67.) Higher property tax burdens correspond closely with higher incomes, low-income property taxpayers (owners and renters) get refunds through the state tax system, and low-income seniors enjoy a property tax deferral option that can be used in conjunction with that refund. (Minnesota Department of Revenue M1PR instructions.) In a way, property taxes are more like a wealth tax than any of the other alternatives available to the City.
Q. Can you explain what a municipal bond is?
A. A municipal bond is government borrowing against future revenues to provide current revenue to address current needs. They are tax-advantaged investments and are generally seen as reliable and safe investments, making them attractive to investors.
The City’s cost of bonding is determined by the bond market at the time of issuance, together with issuance fees. The market is influenced by factors such as the broader economy and the City’s bond rating—which is a subjective measure reflecting various information about the City’s overall financial health, and is in a sense a municipal credit score. According to EMMA, Minneapolis’s 2020 general obligation bonds are rated AA+ by Fitch, and AAA by S&P. (Electronic Municipal Market Access.) Generally, municipal bonds allow the City to borrow at rates below the market rates for a comparable commercial loan.