About a dozen people attended Crow Wing County’s public budget and tax levy summary in a rare Tuesday night meeting.
Several had questions prompted by recently received tax statements but not directly related to Crow Wing County’s spending.
The meeting allows county staff to present the anticipated budget and tax levy for 2013 and go over spending for expenditures. The rare night meeting is designed to give taxpayers a chance to share their views with the commissioners.
There were concerns on property value, increasing taxes when property values are declining and a disparity in how taxes are applied to property classifications. A couple of residents questioned the steep increase doubling the levy for the Garrison, Kathio and West Mille Lacs Lake Sanitary Sewer District.
Teresa Dean, Ironton property owner, was looking for an explanation for an increase, which proved more difficult to get in simple terms. She wanted to know what the fiscal disparity tax was and why it had increased.
“I’m ready to shut my business down,” Dean said after the meeting. Already Dean said they were closed during the winter because they couldn’t afford to pay the heat on the building which houses an aluminum recycling business and Grandma’s Treasures gift shop. Dean said the building was purchased several years ago and taxes went up on numerous fronts.
“The whole thing is ridiculous,” she said. “The state of Minnesota has actually taxed us out of business.”
Fiscal disparity is a tax-base sharing program where growth in the commercial-industrial property tax base in one area is shared with another. In the Twin Cities, taxing jurisdictions in the seven-county metro area share part of the growth in the commercial-industrial tax base. The state has two programs, one in the Twin Cities and one on the Iron Range.
Listed program incentives include support for regional development, equal distribution of fiscal resources and reducing incentives to provide tax breaks to attract development, which could weaken an area’s fiscal condition, the state reports.
“Each municipality receives a share of the area wide tax base through a formula based on its share of the area’s population and its relative property tax wealth (tax base per capita),” the state reported.
Dean said the county told her this was an advantage because Ironton has the highest tax rate in the county and this method actually lowers the rate for one-third of the market value.
Dean said on just the building she has with her husband the property value went up from $46,900 in 2012 to $59,000 in 2013.
Dean said a real estate agent told her she’d be lucky to get $50,000 for the building and two other lots combined. She said the taxes on the building went up 40.8 percent to $2,018, including the fiscal disparity. On just one portion of her taxes, Dean said the fiscal disparity went from $246.43 to $430.61.
“I was just amazed,” Dean said. “Right now we are thinking what do we do. We can’t afford to stay in business. We are still trying to figure out what we are going to do.”
Initially there were nearly as many county assessors on hand to answer valuation questions as members of the public attending. And while the number of taxpayers dropped after some left to talk about valuation concerns, others remained to express concerns about a system they felt wasn’t treating them fairly.
Ken Glidden, a retired seasonal recreational property owner who annually attends budget meetings, said while his property values went down his taxes went up. And while the county was presenting a reasonable picture of expenditures and revenues, Glidden said that wasn’t reflected in his reality.
“That’s disturbing,” he said.
Glidden said he appreciates the road he drives on and doesn’t have a problem paying his fair share but he didn’t think the burden was equal. Instead, he said, it was falling disproportionately on different types of property.
Administrator Tim Houle pointed to the state shift and agreed Glidden was picking up a bigger chunk of the pie. There are property tax refund options for homestead property owners. In one case the refunds are aimed at those with an annual income less than $99,240 in 2011 and for any homestead property owners with a net tax increase of at least 12 percent that is at least $100.
In regard to proposed spending for the 2013 budget, the bulk of Crow Wing County’s costs are in personnel for wages and benefits to $33 million, or a 4.5 percent increase ($1.4 million) compared to 2012. Other 2013 budget expenditures were declining with public aid assistance down by 9.6 percent or $828,532 to $7,786,503. Services decreased by 10.1 percent to $11.8 million largely assisted by a $1.6 million reduction in the highway department. The county’s costs for supplies and materials, including the 800 megahertz project, decreased by 19.1 percent to $17.9 million. Debt services reduced by 26.6 percent ($1.5 million) to $4.2 million for 2013.
Besides personnel, the only other increase listed in expenditures was in capital outlay with a 5.3 percent increase of $900,973 to $17.9 million. The capital outlay category included the proposed Law Enforcement Center (LEC) construction of $15 million.
Commissioner Paul Thiede said he didn’t think $15 million was acceptable to the county’s taxpayers. Proposed spending for the LEC is not from the county levy. Funds would come in existing county reserves, refinancing and extending the debt for one year.
Mike Carlson, deputy auditor and finance director, said it would be a mistake if the county missed out on a 12 percent savings in refinancing, but he noted there are numerous scenarios for the funding from reducing debt to road construction.
If the county doesn’t spend on building a new LEC there will still be remodeling costs, Administrator Tim Houle said. Sheriff’s Lt. Dave Fischer said those costs could be minimal or up to $13.5 million if a full remodel is needed. Fischer said it was 51 degrees in the building recently when the heating system broke down.
Remodeling needs include a roof, heating and air-condition system and surfacing for parking lots.
Sheriff Todd Dahl said he watched staff work in parkas for two days. For several years, Dahl said they haven’t fixed things because they have been in limbo regarding the building’s future. Dahl said remodeling the basement, which was the jail, isn’t a simple task. The sheriff said he understood the board’s position and the frustration with the economy, but said he agreed with the new LEC because he was sold on the fiscal ability to make it work. If it doesn’t happen now, Dahl said the county will be looking at a money pit in the current LEC.
Dahl said: “I don’t think that’s the way we want to look forward.”
The county board will vote on the budget on Dec. 11.