Parks & Recreation

Park Fund Referendum

Why is it necessary to increase the Park Fund levy?

As we all know too well, the cost of everything increases over time. Just as the cost to buy a gallon of milk goes up over time so too does the cost to replace a playground. In contrast, the Park Fund levy was established at a fixed dollar amount of $2.6 million that can never grow. The result is a steadily growing gap between the actual cost to operate and maintain Duluth parks and the funds available to pay for that work.

The proposed change to the Park Fund levy would solve this problem by changing the basis of the levy from a fixed dollar amount to a fixed percentage of property value. The change would make it possible for the proceeds of the Park Fund levy to grow over time with new development and increasing property values so as to keep pace with inflationary increases in the cost of operating and maintaining Duluth parks.

To learn more about the Park Fund, please check out some of the frequently asked questions below. Additionally, stay tuned to this website for more information regarding the Park Fund proposal, ballot language, upcoming informational meetings, and much more.

For anything else or for further questions, please contact parkfund@duluthmn.gov.


 

Frequently Asked Questions about the Proposed Increase to the Park Fund Levy

Minnesota law allows the City of Duluth to establish a property tax for specific purposes such as parks funding. The City Council and Mayor must approve the property tax, and then the property tax must be approved by the majority of Duluth voters via ballot question in an election. In 2011, the City Council, Mayor, and majority of Duluth voters approved a 2012 Park Fund Levy of $2.6M annually for the purpose of providing a dedicated funding source for parks and recreation facilities, recreation activities, and implementation of the concepts addressed in the Duluth parks and recreation master plan. The $2.6M equated to 0.0472654 percent on the referendum market value of all taxable property within the City of Duluth in 2012. The Parks Fund Levy is collected indefinitely unless otherwise revoked or reduced as provided by law.

The proposal is to increase the parks fund levy to a new fixed annual percentage amount of 0.0472654 percent on the referendum market value of all taxable property within the city, which is $4,236,821 on the referendum market value of all taxable property within the city in 2023, and end the entire parks fund levy referendum revenue authorization in twenty-five (25) years at the end of the year 2047, unless otherwise revoked or reduced as provided by law.

Per Minnesota law and Duluth City Code Section 20-29, the proceeds of the Park Fund levy shall only be used to support Duluth Parks and Recreation facilities and programs. The current annual levy revenue is $2.6M. The proposed increase to the levy will generate $1.6M more in 2023 for a total revenue of $4.2M.

By law, the proceeds of the Park Fund levy may only be used to support Duluth Parks and Recreation facilities and programs. The proposed increase to the levy is expected to generate a total of $4.2 million in 2023, up $1.6 million from the current $2.6 million.

The Mayor’s proposed 2023 budget will prioritize expenditure of the $1.6 million annual increase for the maintenance and improvement of existing parks infrastructure including, but not limited to, park buildings, park lands, and park amenities. Special priority will be given to maintenance of deteriorated park infrastructure located in heavily used neighborhood parks.

Park Fund dollars support park operations, maintenance, and capital.

Per Minnesota law and Duluth City Code Section 20-29, the sole purpose of the parks fund levy is funding parks and recreation facilities and activities. Parks fund money shall only be spent on parks and recreation facilities and activities.

Specific investments will be guided by the City of Duluth’s Parks and Recreation Master Plan and the annual Park Fund budget. The proposed new Parks and Recreation Master Plan is listed on the City’s website. The proposed 2023 Park Fund budget will soon be available on the City’s website. Both call for focusing City investments on maintenance, repair, and replacement of existing parks infrastructure.

Information on the Parks and Recreation master plan, Essential Spaces: Parks, Recreation, Open Space, and Trails is available here: https://duluthmn.gov/parks/parks-planning/progress-in-the-park/essential-spaces/

Yes, some of the funding is used for staffing. The park system is operated, maintained, programmed, and improved on a scale that reflects a small but dedicated staff team. The level of service in parks directly correlates to the number of staff available to provide these services.

Should voters approve this, and that scale increases, the additional funding, by law, will go to support Parks operations, maintenance, and capital improvements. With more resources, staff will be able to make more improvements to existing parks, support park maintenance, and programming. It’s possible that that increase in scale may require additional staff to deliver those park services.

The Park Fund levy was established in 2011 at a fixed dollar amount of $2.6 million that can never grow. Operating, construction, and maintenance costs have risen since then. The result has been a steadily growing gap between the actual cost to operate and maintain Duluth parks and the Park levy funds available to pay for that work.

The proposed change to the Park Fund levy will change the basis of the levy from a fixed dollar amount ($2.6M) to a fixed percentage (0.0472654%) of taxable property value. This change will allow the Parks Fund levy to grow over time with increased taxable properties and property values, which will help keep pace with past and projected increases in parks operational and maintenance costs.

Yes, when the $2.6M levy was first collected in 2012, that translated to a levy rate of .0472654% of taxable property value. In the ensuing decade, the value of taxable property in Duluth has increased substantially while the annual proceeds of the Parks Fund Levy have remained capped at $2.6M. As a result, the Park Fund Levy rate has dropped by more than a third from the original .0472654% to a rate that will be .0290052% in 2023 if no change is made. The proposed increase to the Parks Fund levy will restore the levy rate to the original .0472654% and keep it there for the next 25 years.

As the Park Fund Levy rate has decreased as a percentage of taxable property value, the Park Fund Levy tax for a home valued at $200,000 has dropped from $94.53 in 2012 to what will be $58.01 in 2023 if no change is made.

For a home valued at $200,000, the amended ordinance would restore the Park Fund Levy tax to its 2012 level of $94.53 and maintain that tax per $200,000 over time.

The City Council is proposing that the Parks fund levy end in 25 years because the community’s needs and the City’s budgetary capacity change over time in ways that are impossible to precisely anticipate. The end of the proposed Park Fund levy in 2047 will require that Duluth examine how well the Park Fund is serving community needs at that time and determine whether and how Duluth may wish to renew the levy to meet future needs.

Yes, on August 15, 2022, the City Council will consider a resolution that, if passed, expresses their intent that the City of Duluth will invest the proceeds of the Park Fund Levy in a geographically equitable manner across west, central, and east Duluth so as to provide park facilities of equal quality throughout the city and maintain them to an equal standard.

If the increase to the Park Fund levy is not approved, the proceeds of the Parks Levy will remain flat while operational and capital costs will continue to increase.

The City vigorously pursues state and federal funding to maintain, repair, and renew park infrastructure. Unfortunately, most state and federal funding for parks is directed toward parks that are regional destinations. Very little state and federal funding is available for that large majority of Duluth parks that primarily serve residents.

Tourism taxes were established by state statute and city ordinance. They are designated for tourism related uses to promote and support the City of Duluth as a tourist and convention destination. The City does use tourism taxes to contribute to the maintenance of park assets like the Lakewalk, the Lake Superior Zoo, and Wade Stadium that are significant tourism destinations. The City has, at times, used tourism taxes to renew these destination park assets. The City has limited legal ability to use tourism taxes to contribute to maintenance of the large majority of City parks that are not significant tourism destinations.

On August 15, Council will determine whether or not to put the referendum on the ballot for the November 8, 2022 general election. The ballot question will look like this:

CITY QUESTION
To vote for a question, fill in the oval next to the word “Yes” on that question. To vote against a question, fill in the oval next to the word “No” on that question.
City of Duluth Question
APPROVAL OF DEDICATED PARKS FUND LEVY INCREASE

The city has an existing parks fund levy set as a fixed annual dollar amount of $2,600,000 on the referendum market value of all taxable property within the city, which is 0.0290052 percent on the referendum market value of all taxable property within the city for the year 2023. The current parks fund levy is applicable indefinitely unless otherwise revoked or reduced as provided by law.

Should the city increase its parks fund levy to a new fixed annual percentage amount of 0.0472654 percent on the referendum market value of all taxable property within the city, which is $4,236,821 on the referendum market value of all taxable property within the city in 2023, and end the entire parks fund levy referendum revenue authorization in twenty-five (25) years at the end of the year 2047, unless otherwise revoked or reduced as provided by law? The sole purpose of the parks fund levy is funding parks and recreation facilities and activities.

    0 YES
    0 NO

BY VOTING “YES” ON THIS BALLOT QUESTION YOU ARE VOTING FOR A PROPERTY TAX INCREASE.

 

If this ballot referendum language is approved, the City will facilitate public informational meetings prior to the November 8, 2022 election. On November 8, 2022, the Parks Fund levy referendum will be decided by majority vote of those marking either “Yes” or “No” on their ballot.

Yes, when the levy was approved in 2012, it was set at a cap of $2,600,000 and has remained capped since then. In the ensuing decade, the value of taxable property in Duluth has increased substantially while the annual proceeds of the Park Fund Levy have remained capped at $2,600,000. As a result, the Park Fund Levy rate has dropped by more than a third from the original .0472654% to a rate that will be .0290052% in 2023 if no change is made. The proposed increase to the Park Fund levy would restore the levy rate to the original .0472654% and keep it there over time.

As we all know too well, the cost of everything increases over time. In contrast, the Park Fund levy was established at a fixed dollar amount of $2.6 million that can never grow. The result is a steadily growing gap between the actual cost to operate and maintain Duluth parks and the funds available to pay for that work.

The proposed change to the Park Fund levy would solve this problem by changing the basis of the levy from a fixed dollar amount to a fixed percentage of property value. The change would make it possible for the proceeds of the Park Fund levy to grow over time with new development and increasing property values so as to keep pace with inflationary increases in the cost of operating and maintaining Duluth parks.

We do. Every year, it is pretty standard for a government entity to start with a deficit. We deliver services but do not sell items to make up for those increased costs. The cost to deliver the levels of service that our community asks of us goes up every year. We strive for a balance of funding priority services and programs and setting nominal fees that supplement the cost to deliver these services and programs in our park spaces.

While there are other revenue sources that impact the overall City budget, many cannot be used to fund our parks – for instance, it is not legal under state law to use tourism taxes to contribute to maintenance of the large majority of City parks that are not significant tourism draws. Some revenue sources are dedicated to fund other City functions – Police, Fire, Public Works and Utilities, etc. Without cuts to those other departments, and without the Park Fund levy, there are little, if any, other sources to fund park services.

The Park Fund is supplemented by nominal permitting, reservation, and lease fees as well as infusions from the General Fund and Tourism Tax, which must be balanced alongside other critical City services. The current Park Fund levy of $2.6 million is approximately 40% of the funding currently required to operate Duluth’s park system at its current level of service. Affordable access to parks, programs, etc.  requires that fees for services and programs be subsidized. While incremental fee increases are possible and do occur, they contribute just a fraction of the actual cost of the provision of services across the park system.

That’s also why you’ll often hear people speak to EXPANDING the tax base or capturing the increase in property values so more taxation capacity is brought into the fold. Other revenue sources are set by outside entities – Local Government Aid makes up over 35% of our budget but is set by the legislature, for instance.

In addition to the public website where you can find information and leave a comment regarding the parks fund levy referendum, we plan to hold public informational sessions over the coming months.