County Board backs 5% ceiling on tax increase

Battening the hatches for the sea of red ink they fear will rise even higher, Hennepin County commissioners on Tuesday approved a 4.95 percent increase in the property tax levy ceiling for 2010 to cover mounting medical costs and the potential for more state aid cuts.

"Flexibility" was the word most commissioners used in explaining why they supported the 4.95 percent increase in the maximum levy the county can collect, as recommended by County Administrator Richard Johnson.

The County Board now may decide on a final levy that is under that figure, but not over it.

"It's a painful budget for painful times," said Commissioner Jan Callison, noting that a 3 percent levy increase would be preferable but somewhat risky given the anticipated forecast of another massive state budget shortfall.

Jeff Johnson, the only commissioner to vote against setting the ceiling at a 4.95 percent increase, proposed 3 percent instead.

"No matter where I look, my constituents are struggling ... and their property taxes weigh very heavily on them right now," he said. But the rest of the board rejected Commissioner Johnson's amendment.

Dissecting the potential 4.95 percent levy increase, Board Chairman Mike Opat said that 3 percent was a reasonable amount to backstop expected increases in medical expenses, and an additional 1.95 percent was acceptable given the state's poor economic prospects.

Under the new ceiling, the county will able to collect up to $676.2 million in property taxes, compared with $644.3 million this year.

None of the 4.95 percent property tax increase would go toward the county's operating budget, Johnson, the county administrator said. It would raise about $32 million, $18.5 million of which would go to Hennepin County Medical Center. Even then, Opat said, that would cover only about half of the amount that the state typically reimburses the hospital for care for the poor and uninsured.

Much of that funding is slated to disappear next year because of Gov. Tim Pawlenty's veto last spring of General Assistance Medical Care (GAMC), the state's health care program for poor adults.

"We're in the worst recession since the Great Depression ... [and] we need to make sure we maintain our capacity to be that safety net in Hennepin County," Commissioner Peter McLaughlin said.

Under a levy increase of 4.95 percent, a Minneapolis taxpayer with a home at the median market value of $190,600 would pay 4.1 percent more than this year to the county, or about $30. A homeowner in suburban Hennepin County with a residence valued at the market median of $252,800 would owe the county 0.4 percent less, amounting to a savings of $4 next year. Those figures don't include additional property taxes levied by cities and school districts.

Johnson will present a proposed 2010 budget to the board on Sept. 29. The board will approve the budget and levy on Dec. 15.