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Tim Nelson

St. Paul wants to know if tax-exempt churches, schools would contribute voluntarily to budget

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St. Paul wants to find out if non-taxable property owners, like churches and schools, would contribute to the city budget voluntarily, in lieu of street fees.

The fees were substantially pared back after a legal challenge by two churches. The city collected more than $30 million in assessments last year. That's equal to nearly a third of the annual property tax levy. The fees were assessed citywide, including to nearly a third of properties that don't pay property taxes. (Minnesota Public Radio also challenged the fees.)

City Council member Dai Thao said a similar program in Boston found some success and could work in St. Paul.

"The conversation I have in the community is that the churches and nonprofits are, they want to participate. They want to be at the table. They want to be part of the solution and that's very promising," Thao said at a City Council meeting on Wednesday.

Thao and other council members voted to ask the Citizens League to formally study the idea. A report from the league and its work group is expected in August.

Council Member Jane Prince joined her colleagues in voting for the study.

"It encourages a really robust civic discussion among taxpayers, business owners, nonprofits, for what it means for all of us to be doing our part and paying our fair share for the really vital services that we all benefit from," said Prince.

The fees at issue were put in place more than a dozen years ago by then-Mayor Randy Kelly. St. Paul, as the capital city and home to the Catholic Archdiocese of St. Paul and Minneapolis, hosts a substantial number of nonprofits and tax-exempt institutions like schools and universities, churches and hospitals. The city wanted to include some of those properties in its annual revenue stream.

The Minnesota Supreme Court, however, ruled against the city last year and said the so-called "right of way assessments" for services like snow plowing were in fact taxes and couldn't be assessed to tax-exempt properties.