Initial Washington County budget plan: 3.5% levy increase

  • Article by: JIM ANDERSON , Star Tribune
  • Updated: August 9, 2014 - 3:00 PM

The average homeowner would pay $43 more in county property taxes per year under the preliminary proposal.

Washington County commissioners last week got their first look at the proposed 2015 county budget, which would raise the net levy by nearly 3.5 percent, the largest increase after five years of staying virtually unchanged.

If those numbers hold by the time the budget is made final in mid-December, the county’s share of next year’s property tax bill would increase $43 for the average homeowner, from $620 to $663.

The proposed $89.7 million net tax levy, and $152.1 million in total operating expenditures, is just the starting point in what will be a systematic combing through the numbers. The next key date in the process is Sept. 9, when the County Board sets the preliminary levy — from that point, the numbers can only be reduced, not increased.

The county’s growing population is putting new demands on services, and plans to issue $37.5 million in bonds to pay for major road projects, park improvements and reconstructing the North Shop of the Public Works Department partly reflect the 2.6 percent increase in operating expenditures, said Molly O’Rourke, county administrator. The bond costs will actually be paid over the next two to three years, she added, but appear as a single expenditure for 2015.

“Over the past five years, the county’s property taxes have remained fairly flat, even accounting for the projected increase in 2015,” O’Rourke told the board.

Home values are expected to increase 13.5 percent from 2014 to 2015. Median values had risen a modest 2.4 percent in 2014 after five years of steady declines amid the Great Recession. Also for the second consecutive year, new construction increased substantially, adding $333.3 million to the tax base.

“It’s nice to see property values increasing, but that doesn’t bring us 5 extra cents in revenue,” said Commissioner Gary Kreisel, adding it doesn’t mean a windfall for the county. “Regardless of where property values are, it’s still measured against what we budget.”

While those improvements in property value and tax base are good economic signs, Kevin Corbid, deputy county administrator, said there are still plenty of pressure points driving the board’s final spending decisions.

Ideally, Corbid said, the county’s expenditures would be supported equally from three revenue sources: the property tax levy, state and federal money, and fees charged for services. However, as has been the case for several years, property taxes are paying for nearly half of the county’s spending.

About 80 percent of what counties do also is mandated by the state or federal government, but funding to provide those services falls way short. “In fact, [those funds] often do not even cover the increase in providing those services from one year to the next,” Corbid said.

Unfunded mandates have long been a complaint by County Board members, who again voiced some of that resentment.

“The state and federal government has a tradition of passing on costs to the county,” said Commissioner Lisa Weik. “It’s significantly impacting our ability to expand our core services, and it’s just not transparent to the taxpayer.”

Unfunded mandates, it’s estimated, cost Washington County at least $7 million a year.

The county’s Human Services Department, for example, picks up the tab for many mandated services that aren’t funded by the state or federal government. Counties are required by the state, for instance, to maintain a certain level of spending on an array of mental health services, called “maintenance of effort,” or MOE. This costs the department about $5.4 million a year, of which $3.3 million is paid by Washington County.

Washington County received a modest increase of $340,000 in County Program Aid funds from the state, which totals nearly $10 million. Corbid warned that, based on the state formula dispersing those funds, Washington County stands to lose a portion of those funds in the future because the county’s tax base is improving.

Employee wages and benefits account for about 60 percent of the county’s spending. All but one of the county’s union contracts with employees have been settled, Corbid said, and, along with a planned switch in health insurance providers for those workers, those costs will increase $5.3 million in 2015.

The county plans to add nearly seven full-time-equivalent positions in the coming year but, given the increase in population, the number of workers per capita would remain virtually unchanged, as it has for more than a decade.

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