Tax increase possible in Bloomington as city faces financial blow from COVID-19

The COVID-19 outbreak is going to cost the Bloomington millions of dollars in revenue, according to city leaders. 

Hotel stays have dropped, bars and restaurants are closed to dining, and the typically crowded Mall of America is empty.

“Twelve percent of our budget is based off of hotel taxes and liquor and lodging taxes, and right now the amount of money coming in from those two sources is zero,” Mayor Tim Busse said. “So there is going to be a significant hole in the city of Bloomington’s budget.”

The city estimates it could lose $7.5-$11.5 million in 2020 alone.

“It’s just revenues that disappeared overnight. It's a loss that can't be offset with accompanying service or staff reductions,” City Manager Jamie Verbrugge said at Tuesday’s City Council meeting.

City officials are now looking at how to adjust to the loss, without knowing when the global crisis could end.

“Bloomington is going to experience this pandemic in a way that many of our neighboring cities are not going to, at least not as quickly,” said Verbrugge.

During his presentation, Verbrugge said it could “disproportionately affect residential single-family taxpayers in 2021 or 2022.”

Those comments have now been widely shared on social media.

“I was pretty disturbed by that,” said Nick Blanch, a resident. “I think a lot of residents are hurting. A lot of us are scared, don't know what's going on and what tomorrow brings. I think right now is just not the time to be talked about any sort of tax increases.”

He shared his concerns in an email to city leaders.

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“They should be looking at cuts before coming to residents,” said Blanch. “We’re in a time right now when so many people are facing income insecurity, housing insecurity, medical insecurity.”

5 EYEWITNESS NEWS asked Mayor Busse whether there would be a property tax increase.

“It’s an extraordinary circumstance, and without knowing how long this could last, without knowing exactly what the outcomes could be, I really don't want to say one way or another, but I will say everything is on the table right now,” he said. “From a reduction of city services — a significant reduction — to a possible tax increase.

“We’re going to look at it creatively and try to come up with different solutions and possibilities to provide the services that residents have come to expect with the financial realities of the day.”

Busse said about 40 employees who work in buildings that have closed have been laid off or furloughed.

The city is also looking at whether to cancel summer programs, with uncertainty about how long the governor's "stay at home" order will be in place.

“We would absolutely hate to cancel programming, but it may be the financial and the practical reality that we are not able to do it in the city of Bloomington,” said Busse.

For Blanch, it’s a step in the right direction.

“I think that’s a reasonable way to make cuts at this point,” he said. 

According to Verbrugge, the city will likely be living with the effects of the pandemic for a couple of years.

“Bloomington has been […] very fortunate over the last couple of decades to have a broad base of revenues so we’re not largely dependent on property taxes,” he said.

“We’re very fortunate to have a very financially sound foundation underneath us. It’s really only an event of this magnitude that could so dramatically affect the financial situation — but it will.”