The Hennepin County Board agreed Tuesday to a 6.5% maximum increase for 2024 in the property tax levy that funds most county operations, with nearly all the new revenue generated by the hike earmarked for worker pay increases and benefits.

Property taxes are Hennepin County's biggest source of revenue, bringing in almost $1 billion annually. The proposed property tax increase would raise nearly $60 million more to help fund the county's proposed 2024 budget, which is expected to top $2.6 billion.

County commissioners plan to dig into the budget proposal and take public input over the coming weeks before finalizing a spending plan and property tax increase in December. State law requires counties to set a maximum levy increase amount each year by the end of September, but the actual increase can be lower.

David Hough, county administrator, wrote in his initial budget proposal presented to board members Sept. 12 that it is a priority to give county workers pay raises and to keep health care costs in check. The county covers about 88% of employees' health care premiums.

"Hennepin County's mission is only possible thanks to our workforce," County Board Chair Irene Fernando said during Tuesday's meeting. "In times of crisis and recovery, county services are needed even more."

But some county workers are frustrated with what they say are unusually large proposed increases in premiums brought on by a change in healthcare plans. Members of the American Federation of State, County and Municipal Workers Local 34 held up signs outside the county board meeting room and chanted as the board discussed its proposed budget.

Grace Baltich, union president, said many members will see health care costs rise by as much as 27% because county leaders have changed health plan offerings without the union's consent. "That's unheard of," Baltich said, noting the unit of 2,400 members has filed a grievance and an unfair labor practice charge over the changes.

Hough says the county has a self-funded insurance plan and was forced to change the organization that administers it, leading to changes. He said many county employees will see lower premiums and those who see increases should have the costs offset by pay increases of roughly 5.5%.

Board members also voted Tuesday to put $500 into health savings accounts for some employees who were previously on a lower-cost health plan. Hough said that overall Hennepin County offers competitive benefits compared with surrounding governments.

The proposed 2024 budget includes hiring about 400 new employees. Hennepin County's nearly 10,000 employees account for a little less than half the county's annual operating budget.

Minnesota counties are getting some new aid from the state. The tax bill approved by the Minnesota Legislature in May included an $80 million-a-year increase in state aid to counties to help keep rising property taxes in check.

"That helps," Hough said of the state funding boost. "It relieves some of the pressure."

Nevertheless, Hennepin County's proposed maximum levy increase is the highest since 2008. Each of the last two years, county leaders hiked property taxes by 3.5%.

Neighboring Ramsey County set its maximum tax levy hike at 6.75% for the coming year.