M By Joe Mahon

inneapolis is responding to budget difficulties by raising property taxes next year, and that might mean higher rent for some University students living in houses.

The Minneapolis City Council held a hearing Monday night – “Truth in Taxation” – which invited members of the public and private sectors to speak their minds about plans to raise property taxes by 7.9 percent.

“I’ve been on city council for five years, and this is easily the largest turnout I’ve seen,” City Council President Paul Ostrow said about the meeting, which was so crowded that people had to stand in the hall outside the chambers.

The meeting included almost two hours of testimony from city residents and business people.

Victoria Heller, who owns property on the University’s West Bank, said the average tax hike on all of her properties was 27 percent.

“The typical landlord would have to pass all that on to tenants,” she said.

The rates of increase depend on the value of the property, city officials said. Less valuable properties will face higher increases.

“The city can only control the total amount to increase tax revenue,” said Laura Sether, spokeswoman for Minneapolis Mayor R.T. Rybak. “The state government sets the rates.”

Sether noted that even with a recent economic downturn, property values are still on the rise, which might increase the tax burden even if tax rates stayed the same. City property taxes have been increasing for several years in part to higher property values, which is one reason citizens are concerned, she said.

Businesses and homeowners also face different rates of increase.

“The press spin the tax increase to be an issue where residential tax is going up because business got a break,” said John Kolstad, president of Mill City Music on East Lake Street.

“It’s not business that’s getting the break – it’s big business – and we small business people and residents are paying for it,” Kolstad said.

The city’s budget troubles stem from a $1.5 billion deficit that has accumulated during several administrations, Sether said.

Kolstad and Heller both place blame on the Minneapolis Community Development Agency, which is set to receive approximately $150 million next year – 12 percent of the total budget.

“The (Minneapolis Community Development Agency) became the lender of choice for developers, and the consequence was a tremendous amount of bad debts,” Heller said.

Many of the speakers at the hearing echoed the same sentiments and said residents and businesses are leaving the city as a result.

The Minneapolis City Council might be using advice from the meeting’s participants as it finalizes its budget this week, but some questioned the forum’s effectiveness.

“I talked to one council member afterwards and asked what he thought of the hearing. He said it was a very powerful presentation by some very articulate speakers,” Kolstad said. “I asked him what effect it might have on the council’s decision. He said none.”

The council will adopt its 2003 budget Dec. 16.