Duluth may increase levy by 6 percent

Duluth residents could see the city's share of their property taxes increase by up to nearly 6 percent next year.

By an 8-0 vote with 5th District Councilor Jay Fosle absent, the Duluth City Council passed a resolution Monday night setting the maximum levy for the coming year. The levy won't be finalized until December.

Mayor Emily Larson had proposed a budget that would have yielded an anticipated 3.96 percent property tax increase.

But the council set a max levy that leaves room for an additional 1.96 percent to be tacked onto the local property tax.

This additional tax is proposed to cover the cost of phasing out the city's streetlight fee.

That monthly fee had been slated to sunset at the end of 2019, but it could take longer.

Council members offered competing proposals Monday night on the timeline to retire the unpopular fee, which appears as a line item on residents' Comfort Systems utility bills.

Councilors Zack Filipovich and Joel Sipress proposed sticking to the 2019 end date with a proposed additional 1.96 percent property tax increase next year.

Meanwhile, Councilors Noah Hobbs and Arik Forsman proposed stretching out the timeline, with property tax increases of a half-percent for several years running.

Sipress noted that by adopting the higher maximum levy, the council will leave room for further examination of its options. It does not obligate the council or preclude the possibility of a lesser shift.

Filipovich advocated for shifting away from the set fee, saying that a switch to property tax funding actually would save most residents money. He said such an approach would be a transition from a regressive to a progressive funding mechanism.

Sipress criticized the fee, saying: "Whether you live in a modest home or a mansion you pay the same."

He argued property taxes are a fairer way to distribute the burden of paying for city lights.

David Montgomery, Duluth's chief administrative officer, suggested that stretching out the timeline for phasing out the streetlight fee would allow for more modest property tax increases. He said that Duluth's property taxes sometimes draw scorn when the city is lobbying for support at the state legislature.

But the proposal by Sipress and Filipovich won out by an 6-2 margin Monday, with Councilors Hobbs and Forsman voting in the minority.

For the owner of a $175,000 home, the mayor's budget would have translated into a $20 bump in the city's portion of property taxes.

If the City Council ultimately adopts a budget in line with the larger maximum levy, it would add an additional $11.35 onto the tax bill of that same $175,000 home, bringing the total increase to $31.35.