Light rail and other transit, the potential purchase of the Thrivent building and ongoing personnel costs are key reasons why many Hennepin County residents likely will see a tax hike next year.

Hennepin County Administrator David Hough on Tuesday presented details of his 2018 budget proposal to the County Board, calling for a 4.95 percent increase in the property tax levy — $37 million more than this year's levy.

Total individual tax bills also depend on the amount levied by cities and school districts, as well as property assessments and tax rates.

Hennepin County's total proposed budget of $2.4 billion is $297 million more than this year's spending plan. The county's budget is second in size only to the state's among governmental entities.

The budget and tax levy reflect several significant and ongoing challenges, Hough said. In 2018, the county expects to lose nearly $60 million in state and federal funding. He noted that most of the levy increase is due to higher salaries and benefits for county employees.

"The addition of new staff to decrease caseload size and fulfill our client responsibilities is also driving costs," Hough said.

He highlighted several projects driving the budget's capital expenditures, including the Southwest and Bottineau light-rail lines and the Orange bus-rapid transit line ($150 million); the county's office space needs, which would be met mostly through purchase of the Thrivent Financial building and adjacent parking ($75 million); reconstruction of Flying Cloud Drive in Eden Prairie and 66th Street in Richfield ($32.6 million); Hennepin County Medical Center projects ($18 million); and expansion of the NorthPoint Health and Wellness Center ($18.4 million).

Commissioner Peter McLaughlin said afterward that the budget was a good start. He said the county is in a good place because of the growth in jobs, new construction and residents, and a healthy state economy, all of which translate into a 7 percent increase in the value of land and buildings.

"We have the ability to pay for things, and there is a demand for paying for more things because we are growing," said McLaughlin. "We have opportunities to do things right now."

In his presentation, Hough stressed the budget reflects ways to reduce racial disparities in income, education, employment, housing, health, transportation and justice.

"The budget demonstrates our core values of continuous improvement, customer service, diversity and inclusion, employee engagement and workforce development," he said. "Most importantly, this budget is our commitment to serving residents."

The County Board will approve a maximum property tax levy on Sept. 26. The board will hold its annual truth-in-taxation hearing on Nov. 28, and finalize the 2018 budget and levy on Dec. 12.

David Chanen • 612-673-4465