Even as Crow Wing County makes cuts in anticipation of losing state aid for the 2011 budget, the end result for taxpayers may not be lower taxes.
Commissioners, department heads and staff members took part in a review of the preliminary budget and levy Tuesday. The board is expected to adopt a preliminary budget at its Sept. 14 meeting.
Previously, the board stated a goal of designing a county budget that didn't depend on the state's general aid for its operational budget needs. It doesn't mean the county doesn't get any funding from the state. But other aids and credits have specific designations such as Enhanced 911 or for human service programs.
The state is facing an estimated shortfall of $5.77 billion, and potentially more depending on the source, in the next biennium. For the county, that puts a big question mark on up to $2.8 million expected in state funding.
In simple terms, the Crow Wing County auditor's office produced an example to show how taxes may go up even when estimated market value decreases.
For instance, if the total estimated market value is $100 and the total county levy is $100, the county tax is $1.
If the total estimated market value is $90 and the total county levy remains $100, the county tax becomes $1.12
With the reduced estimated market value example, the same amount of dollars are being pulled from a smaller pool of funds resulting in an increased tax.
So a residential homestead with a market value of $100,000 in 2010 paid county taxes of $280.29. Say that home dropped to a market value of $95,000 for proposed 2011. The county portion of the tax would be $283.69.
On the commercial/industrial side, a business with a market value of $300,000 in 2010 paid county taxes of $1,471.52. For proposed 2011 with a decreased market value of $285,000, the county taxes would be $1,478.17.
Source: Crow Wing County.
"That's what people don't understand," said board Chairman Phil Trusty. "We are trying to control a budget with money we can't control."
The county just has to look at recent history. Unallotments, where the state has made cuts to money for local government, amounted to a decrease of $596,140 in 2008 for Crow Wing County, $435,790 in 2009 and $1,574,021 in 2010.
The proposed 2011 budget lists expenditures of $63,436,061, revenues (grants and fees for example) of $29,797,464 and $36,221,696 from the property tax levy.
Salaries and wages account for $22,515,805 of the proposed 2011 budget, an increase of $206,144 from 2010 but down $624,751 from 2009.
Since 2008, the county has reduced its workforce by 14.5 percent down from 485.6 full-time equivalents in 2008 to 415.3 FTEs for the preliminary 2011 budget.
Another factor driving up costs are an increase in health insurance premiums, up 14.8 percent this year alone.
The county reported there were wage concessions for 2011 with no cost of living increases or step increases taken by senior management. There were no cost of living increases taken by leadership and non-contract employers and no COLAs with the leadership with the ONCE bargaining unit, deputies and highway IUOE engineering and maintenance group.
Budget savings of $262,926 were reported in Land Services, $794,584 in public safety, $499,500 in highway, $1,068,265 in community services and $739,496 in other general government.
So what could all this mean for taxpayers? It's a mixed bag.
"I just want us to all be aware that even though we've done our part to hold the spending, to hold the levy flat, that doesn't necessarily mean it's going to translate to a tax decrease for the public," said Auditor Deborah Erickson. "... But the point you can take is we did not increase spending. We held our spending flat. We held our expenditures flat. We held our levy flat."
The estimated tax rate for 2011 would be 29.86 percent. Erickson said this number continues to represent one of the lowest tax rates in the state. At the same time, property values are declining. The estimated market value in the county is expected to drop 7.3 percent compared to taxes payable for 2010.
The county won't know until 2011 what the state will do in terms of unallotments. The auditor's office notes if state aid or credit is received in a partial unallotment, the money will be used to fund costs associated with retirees' benefits and the mandated move to 800 megahertz radio system for emergency services by 2013.
Council members Doug Houge and Rachel Reabe Nystrom were absent Tuesday.
Once adopted later this month, the 2011 budget may be decreased but cannot go any higher.
RENEE RICHARDSON may be reached at email@example.com or 855-5852.
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