Worried Hennepin County hikes property tax

Tucking an additional $12 million away in the county's rainy day fund for what promises to be a stormy year ahead, Hennepin County commissioners at the last minute Tuesday raised the 2010 property tax levy higher than previously planned.

The County Board's action to increase the tax levy by 4.95 percent in 2010 -- nearly 2 percentage points higher than recommended by County Administrator Richard Johnson in September -- reflected concerns about continued ballooning of the state's massive deficit and the county's ability to take care of basic needs in light of numerous program cuts. All of the extra money will go into reserve for now.

"We know what the financial future is next year and it's not good," said Commissioner Mark Stenglein, who with colleague Jan Callison offered the amendment to push up the levy. "There's just way too many unknowns out there -- and knowns -- for us to take any chances."

Said Callison: "Today, we know that the state budget forecast is worse than we thought it was going to be. We don't know what unallotment is [the process by which the governor de-funds programs], but we know it's still a very real threat. And, in fact, the uncertainties have continued and there are other uncertainties before us.

"So I think it's very prudent to have this money, which will be used for fund balances."

The 2010 budget of the state's largest and richest county calls for $1.6 billion in spending, about 6 percent less than this year's budget. The new budget will eliminate about 120 full-time jobs, mostly through attrition, and reduces construction and remodeling projects.

Other than what goes into reserves, most of the additional property tax revenue generated by the 4.95 percent increase is slated to help Hennepin County Medical Center meet additional expenses expected as a result of state cuts in medical assistance.

The board passed the higher tax levy on a 4-3 vote, with Commissioners Jeff Johnson, Randy Johnson and Mike Opat voting no. Then the board approved the budget on a 5-2 vote, with Jeff and Randy Johnson in opposition.

A lone dissenter

Jeff Johnson -- a former Republican legislator who, in his first year on the board, has often found himself in the lonely position of opposing increased spending -- said a bad year is no excuse for raising taxes. "Government needs more, year after year after year," he said. "This just strikes me as a year, if there ever was one, where we should be saying we don't need more."

Commissioners Peter McLaughlin and Gail Dorfman criticized Johnson's reasoning, arguing that the county had already laid off employees and cut programs to address the loss of state medical assistance for the poor. "It's not about spending more, it's about treading water at best," McLaughlin said.

With a levy increase of 4.95 percent, a Minneapolis taxpayer with a home at the median market value of $190,600 will pay 4.1 percent more than this year to the county -- about $30. A suburban Hennepin County homeowner with a market-median home of $252,800 would owe the county about $4 less next year. The difference has to do with the fact that median assessed values in the suburbs proportionally went down more than they did in the city this year.

The board had given itself the wiggle room to raise the tax levy by 4.95 percent back in September, when it set that mark as its maximum possible increase. Opat, the board chairman, had agreed, saying a 3 percent increase was needed to cover medical cost increases and the extra 1.95 percent was necessary in light of the poor economy.

On Tuesday, Opat still called the 4.95 percent property tax levy "reasonable" and said he liked the idea of putting it in the reserve fund. But he voted against it anyway, saying his constituents are finding their property taxes are rising even when their homes are valued for less.

He did vote in favor of the overall budget, calling it "good" but "not without its pain." The next move, he said, is up to the governor and legislators to help Hennepin County Medical Center find ways to treat the poor.

The board also approved the hospital's unbalanced budget for next year. That budget has a deficit of $25 million, even after a county subsidy of $30 million for uncompensated care. Three percent of the tax levy increase will generate $18 million for HCMC.