Minneapolis-St. Paul business news today: Tax hikes loom
Key points:
- • Minneapolis Mayor Jacob Frey has proposed an 11.3% property tax levy increase for 2027.
- • St. Paul faces a potential 6.8% hike, and every metro county is weighing at least 7.9%.
- • Dakota County approved an 18.5% ceiling.
October 2026 — Property owners across the Twin Cities are getting a clearer look at how much more local government could cost them next year, with several major jurisdictions setting sizable maximum levy increases. Minneapolis-St. Paul business news today centers on a wave of proposed property tax levy increases led by Minneapolis Mayor Jacob Frey’s 11.3% hike, as reported by Axios Twin Cities.
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It is the largest proposed levy increase for the city in decades, with St. Paul and all seven metro counties also weighing sizable jumps.
The proposal has already split the officials charged with setting limits. Minneapolis’ Board of Estimate and Taxation set the city’s maximum 2027 levy on Sept. 23, establishing the ceiling for the city’s tax collection while leaving the City Council room to adopt a lower final levy in December. Frey’s original proposal called for an 11.3% increase, which the city says would help close a more than $60 million budget gap driven by rising costs, inflation, higher labor and operating expenses, the end of federal pandemic relief and lower downtown commercial property values.
The city’s 2027 budget proposal estimates that the proposal would add about $409 a year to the property-tax bill of a median-value Minneapolis homeowner.
The Minneapolis Park and Recreation Board separately requested a 5.86% increase in its 2027 tax levy, rather than the 2.5% increase recommended by Frey. The Park Board says its proposed increase would amount to about 1.02% of the overall Minneapolis property tax, and the Board of Estimate and Taxation was scheduled to determine its maximum levy on Sept. 23. The Park Board’s 2027 budget proposal lays out the separate requests and the remaining December budget process.
St. Paul also faces a tax increase
The pressure isn’t limited to Minneapolis. St. Paul Mayor Kaohly Her proposed a 6.8% levy increase, and the city’s maximum 2027 levy was set at that level in September. The final budget and levy can still be reduced before December. Across the seven-county metro area, county governments were considering increases of roughly 8% or more, according to Axios’ September assessment.
Dakota County went further than any of the jurisdictions discussed here. Its Board of Commissioners approved a maximum proposed 2027 levy increase of 18.5% on Sept. 22, consisting of a 17% increase for operations and 1.5% for reserves. Commissioner Liz Workman voted against the measure.
The county says commissioners can reduce the levy before adopting the final budget in December but cannot increase it above the September maximum. Dakota County’s explanation of the 2027 maximum levy also notes that the increase applies only to the county’s share of a property-tax bill; cities, schools, townships and other taxing districts set their own levies.
The calendar gives the region a short window to react. Minnesota’s property-tax process requires local governments to establish their proposed or maximum levies in September, with taxpayers subsequently receiving proposed tax information before final levies and budgets are adopted in December.
Minneapolis’ own budget-planning schedule says the Board of Estimate and Taxation sets the maximum property-tax increase in September, while the City Council continues its budget review through early December and adopts the final budget by mid-December. The September figures therefore establish a ceiling rather than a final tax bill, and the next two-plus months will determine how much of that ceiling becomes part of the final budgets.
For businesses, levy increases rarely stay on the tax bill where they land. Commercial property owners often pass property taxes and other operating expenses through to tenants under the terms of their leases, which means retailers, restaurants and office tenants in Minneapolis could see occupancy costs rise even if their base rent holds flat.
That dynamic lands at a sensitive moment for downtown Minneapolis, where landlords have spent the post-pandemic years working to fill space and where every additional line item on a tenant’s bill can complicate renewal negotiations. Small businesses that own their buildings face the increase more directly, although the effect on any individual property depends on its assessment, classification and the other taxing jurisdictions included on its bill.
The underlying drivers help explain why so many jurisdictions are moving at once. Minneapolis officials have pointed to a combination of revenue pressures, inflation, higher labor and operating costs, the expiration of federal pandemic relief and declining downtown commercial property values. Dakota County, meanwhile, says rising operating costs, state and federal cost shifts and growing demand for services are contributing to its unusually large proposed increase.
When several layers of local government raise their levies in the same year, the combined effect on a single property can be larger than any one proposal suggests because city, county, school district and other local levies stack on the same bill. Dakota County’s levy explanation specifically notes that the county accounts for only part of a property’s overall tax bill.
Impact on competitive positioning
That stacking effect matters for the region’s competitive position. Site-selection consultants and expanding employers compare total occupancy costs across metros, and property taxes are one component of the cost environment local governments influence. The Twin Cities compete for corporate headquarters and for the talent that follows them against metros that market their tax and business climates aggressively.
A year in which Minneapolis and several surrounding jurisdictions propose sizable levy increases could become part of that comparison, even though a property’s actual tax burden depends on its value, classification and the levies of multiple taxing jurisdictions. How officials explain the increases, and what residents and businesses get in return, will shape the broader business debate over the region’s cost structure.
The next two-plus months will determine how much of these proposed increases actually reaches final tax bills. Executives and property owners should watch Minneapolis City Council’s final budget and levy decisions, St. Paul’s final budget process, the Park Board’s budget and levy decisions, and whether Dakota County’s commissioners reduce their 18.5% maximum before December. Commercial landlords should be modeling 2027 operating-expense pass-throughs now, and tenants with renewals coming up should be asking for those estimates before signing. The December votes will show how much of September’s maximum levy authority local officials ultimately choose to use.
Want more? Read the Invest: Minneapolis–St. Paul report.
