Faced with a bevy of new initiatives from its recently completed downtown planning effort, the city of Mankato is considering adding a new line item to property taxes.

The tax would be levied by the Mankato Economic Development Authority, or EDA, an arm of the city government.

State statute limits the amount of money that EDAs can tax, and Mankato City Manager Pat Hentges has suggested a levy of $575,000, which is just below the legal limit. The initiatives include $50,000 to start a downtown business association, $75,000 for an arts and culture district and $100,000 for parking lots and other downtown projects. (See table, page A8.)

“Certain items are nice,” Hentges said, “but they may not be necessary under the current taxing environment.”

And that’s the big question: Will a tax increase be palatable to the public?

A change in the funding formula for state aid to cities will cost Mankato about $590,000 next year, prompting Hentges to predict that next year’s levy increase will be as high as 14 percent.

City Finance Director Dan Scott predicted the increase will be between 8 percent and 14 percent.

While property taxes statewide have increased by 84 percent for homeowners since 2002, Hentges says Mankato’s increases have been reasonable. Mankato’s levy has risen by about 10 percent for the past three years.

City Council President Mike Laven said the wide variety of suggested initiatives would draw “support from a broad base of the community.”

Mayor John Brady agreed citizens care more about value for their tax dollars than simply whether or not taxes are rising or not.

“I don’t think people mind if they think they’re getting benefits,” he said.

A Minnesota Department of Revenue spokeswoman said only 19 economic development authorities across the state take advantage of their authority to levy. That’s a small percentage of all the EDAs statewide, she said.

Some cities, such as North Mankato, tax for economic development initiatives with the general fund levy.

City Administrator Wendell Sande said North Mankato uses $45,000 from the regular tax levy to support its port authority, which is essentially the same as an EDA. Most of that money, $33,000, goes toward the city’s contract with the Greater Mankato Economic Development Association.

Mankato’s suggested EDA levy includes $50,000 for its own contract with GMED, and $75,000 in other efforts now funded by the general fund budget.