Hennepin County officials on Tuesday recommended a 3.5% property tax levy to fund the county's $2.4 billion budget for 2022.

The financial hardships for residents and businesses during the pandemic pushed board commissioners to approve a 0% property tax levy increase for the 2021 budget. The county also received $465 million in federal funding for COVID-19 medical expenditures and a wide array of pandemic-related initiatives.

County Administrator David Hough, who gave a 40-minute budget presentation to the board, said the economic recovery is projected to be slow moving forward. A decline in property tax revenue and the uncertainty of future federal and state funding were a significant factor in the levy increase, which will fund $900 million of next year's budget, he said.

"We'll be faced with decisions about how to continue investments made with these [federal] dollars," Hough said. "While the county's residential real estate market remains strong, the commercial and industrial market continues to be challenged by the impacts of COVID-19."

The County Board will set the maximum property tax levy Sept. 21 and vote to approve the budget Dec. 14.

Last month, the Ramsey County Board proposed a 1.5% increase in its 2022 property tax levy. Like Hennepin County, Ramsey officials also voted to keep the tax levy flat for the 2021 budget.

The 0% increase in this year's property tax levy was the lowest rate change since the Hennepin County Board cut the property tax levy by 1% in 2010. The board has raised the county's property tax levy each year by an average of 4.6% since 2015, and last year raised the 2020 levy by 4.75%.

While Hennepin County managers submitted large cuts to commissioners for this year's capital budget, Hough is asking the board to grow the 2022 funding for long-term projects to $333 million. That would be a 73% increase compared with the 2021 capital budget. Several of the projects weren't budgeted for 2021.

Those projects include $72 million toward road, bridge, light rail and trail infrastructure, $42 million for safety and justice facilities and $95 million to support health and human service programs and parking ramp expansion for Hennepin Healthcare.

The county is allotting $52 million to build one of the country's few anaerobic digester facilities that will process household and commercial waste including food scraps, soiled paper and compostable products.

Hough spent much of his presentation highlighting the county's efforts to respond to the pandemic. More than $60 million was spent to distribute 1.5 million masks to communities, hold 210 testing events and administer 60,224 vaccinations to residents and employees.

The county also allotted more than $180 million to provide small grants to 6,507 businesses, rental assistance for thousands of tenants and landlords and to acquire properties and provide protective and isolation shelter for 1,944 people who were high-risk or experiencing homelessness.

"History will reflect what Hennepin did during this pandemic," Hough said. "A proactive response toward employee and resident health and safety was paramount in these efforts."

County officials used some of the broad guidelines provided by the federal funds it received to start initiatives on disparity reduction, gun violence prevention and a climate action plan. The county also added about 300 employees.

Over the next few months, the County Board will hold public budget proposal hearings from every county division. Commissioner Debbie Goettel said cities and school boards will be looking to raise taxes next year as well.

"There are still a lot of hard economic times coming," she said. "We will be budgeting through a pandemic for the next five years."

David Chanen • 612-673-4465