Tax burden is growing for Minnesota counties, and that's wrong

Washington County is considering its largest property tax levy increase in years in 2018, 6.9 percent. Ramsey County commissioners are fretting about pushback from property owners in the county's lower-income areas as residents see how rising property values and the county's proposed 4.3 percent levy increase combine to hit them with double-digit boosts.

Meanwhile, in west-central and southwestern Minnesota, many counties are preparing 2018 budgets that call for little or no levy increase after years of climbing property taxes. For example, in Stevens County, county coordinator Rebecca Young says commissioners are eyeing a levy increase of less than 0.5 percent, compared with a 7.93 percent increase last year.

A tale of urban spendthrifts vs. frugal country folk? Or a new Republican-controlled Legislature playing favorites with greater Minnesota? Minnesotans should know that like most simplistic analyses, those are misleading.

More accurate is this: Minnesota is witnessing the latest twists in the complex relationships that bind state government and its 87 county subdivisions. Those 159-year-old relationships are still evolving. The wide variation in county levies proposed for next year suggests that they need more work.

For counties, "it's been a tale of two Legislatures," explained Julie Ring, executive director of the Association of Minnesota Counties. "The tax bill giveth, and the human-services bill taketh away."

The 2017 tax bill delivered the first increase in County Program Aid (CPA) in four years — $25.5 million per year, beginning in the second half of 2018. That increase will be distributed according to a new formula that Ring's association devised and all 87 counties supported. It corrects a flaw in the previous formula that was working to the disadvantage of counties dominated by agriculture, some of which had seen an 80 or 90 percent CPA drop in recent years as farmland values rose.

The new formula translates into good property tax news in sparsely populated rural counties, said Swift County Board Member Gary Hendrickx, president of the Association of Minnesota Counties. "But it'll be a rough year for the more populous counties," he said. "As a whole, there are going to be larger increases."

Those unfunded mandates to counties and their taxpayers are nothing new. But they are increasing. Ramsey County Board Member Jim McDonough says that when he took office in 2000, property taxes covered about a third of county costs. Today, it's 40 percent.

Unless the Legislature changes its human-services funding ways, that trend could accelerate. One-time money to the tune of $350 million a year is propping up health care spending in 2018-19, draining the health care access fund by 2021. When it's gone, a bigger cost shift to counties could ensue. Meanwhile, Ring said, a failure to invest in modern information technology is adding to county administrative costs for human-services programs.

Now — while the state budget is in the black and before that one-time money is gone — would be a fine time for state and county officials to lay plans together for avoiding additional cost shifts to counties and the spikes in county property taxes they cause.