Board Sets Maximum Levy Increase for 2013

Written by Jeff Johnson on September 17, 2012. Posted in General

Board votes to limit levy increase to 1.52% next year

Last week the county board set the maximum level at which we can levy property taxes on our constituents in 2013.  Once that level is set, we cannot later decide to tax more, although we could choose to tax at a lower level when we pass our final budget in December.  In the past, the final levy amounts have usually been very close to the maximum levels we have set.

Hennepin County has three tax levies.  The largest – by far – is the general levy, which is currently set at just over $668 million.  The rail levy is currently set at $18 million.  The housing levy is currently set at $5.61 million.

When we met last week, county administration proposed that we set maximum levy increases at 1.3% for the general levy, 16.67% for the rail levy and 23.5% for the housing levy.  All told, that would have been an overall maximum levy increase of 1.9%.

When we considered the general levy, Commissioner Opat offered an amendment to cut the maximum increase from 1.3% to 1.0% which passed unanimously.  My proposal to limit the max levy to a 0% increase failed on a vote of 2 – 4 (with Commissioner Randy Johnson and I supporting the 0% option).  The final vote on the 1% maximum levy increase was also 4 -2 (with Randy Johnson and I voting “no”).

The 16.67% maximum rail levy increase passed on a vote of 5 – 1 (I was the “no” vote).  The board unanimously supported Commissioner Callison’s motion to decrease the maximum housing levy increase to 14.6%.  The final vote on that maximum increase was also 5 -1 (I was the “no” vote).

Overall, we set a total maximum levy increase for 2013 at 1.52% (or $10.5 million).

I did not support any of the maximum levy increases.  As I pointed out to my colleagues, taxpayers in Hennepin County (and throughout the country) are still struggling mightily.  Unfortunately, the common response to that fact is: “We need to spend more money to help those struggling taxpayers.”

There is an alternate view, however – to which I subscribe: “When our constituents are struggling, let’s at least agree not to take more of their money.”

I actually believe we should cut the property tax levy as we continue to see the median household income level drop and thousands of home foreclosures in Hennepin County each year.

To give credit, we did actually cut the total levy the past two years (by 0.26% in 2011 and by 0.15% in 2012).  Unfortunately, our maximum levy increase for next year is nearly quadruple those combined cuts.  More importantly, in the two years prior to those small cuts we raised the total levy by 5.73% in ’09 and by 6.47% in ’10.  In fact, the total levy burden has increased from 2003 to 2013 (proposed) by over 43% – and that factors in the decreases in ’11 and ’12.

In other words, those two small levy decreases were a tiny blip in a very long history of large county tax increases – and they will be completely offset by what we’re proposing for 2013.

The county spending trend is similar to the county taxing trend.  With a couple of exceptions prior to 2010, we saw constant annual spending increases for the past few decades, most of them well in excess of inflation.  We did, however, see two real cuts in spending in 2010 and 2011 (a 7.4% cut and a 2.2% cut, respectively).  The five years prior to those cuts saw annual increases of 5.6%, 9.2%, 7%, 6.4% and 8.5%.  This year, we increased general fund spending by 5.6% and next year we are projected to increase spending by another 6.1%.  Again, while the cuts were real, they appear to be but a blip in our propensity to increase spending well in excess of inflation every year.

Below is a graph of the Hennepin County budget (minus HCMC spending) and total levy over the past 25 years.

Year Adopted Gen Fund Budget (in millions) Final General Levy Amount Rail Authority Levy Amount Housing Levy Amount Total Levy Amount Total Levy Percent Increase
2013 $1,750.5 $675,061,769 $21,000,000 $6,430,000 $702,491,769 1.52%
2012 $1,649.5 $668,377,989 $18,000,000 $5,610,000 $691,987,989 -0.15%
2011 $1,561.4 $669,404,998 $18,000,000 $5,610,000 $693,014,998 -0.25%
2010 $1,596.0 $676,166,664 $15,000,000 $3,610,000 $694,776,664 6.47%
2009 $1,723.0 $644,275,050 $7,000,000 $1,310,000 $652,585,050 5.73%
2008 $1,631.5 $602,238,784 $15,000,000 $617,238,784 6.84%
2007 $1,494.6 $565,197,459 $12,500,000 $577,697,459 6.31%
2006 $1,397.0 $535,828,910 $7,600,000 $543,428,910 3.92%
2005 $1,313.5 $515,349,613 $7,600,000 $522,949,613 4.16%
2004 $1,210.2 $495,665,239 $6,400,000 $502,065,239 2.44%
2003 $1,304.6 $485,412,883 $4,700,000 $490,112,883 5.15%
2002 $1,287.1 $461,414,597 $4,700,000 $466,114,597 4.05%
2001 $1,211.1 $443,275,016 $4,700,000 $447,975,016 5.17%
2000 $1,163.7 $421,264,160 $4,700,000 $425,964,160 2.29%
1999 $1,089.7 $411,738,549 $4,700,000 $416,438,549 6.29%
1998 $1,062.5 $391,809,187 $0 $391,809,187 4.26%
1997 $1,000.0 $375,803,493 $0 $375,803,493 2.48%
1996 $923.6 $364,806,849 $1,900,000 $366,706,849 3.76%
1995 $899.3 $351,403,259 $2,000,000 $353,403,259 4.60%
1994 $892.8 $335,855,727 $2,000,000 $337,855,727 2.13%
1993 $830.6 $328,807,091 $2,000,000 $330,807,091 -0.49%
1992 $790.2 $330,433,377 $2,000,000 $332,433,377 -0.87%
1991 $915.5 $313,840,086 $21,500,000 $335,340,086 15.67%
1990 $797.4 $280,422,991 $9,500,000 $289,922,991 5.29%
1989 $735.3 $275,345,239 $275,345,239 13.90%
1988 $651.7 $241,744,403 $241,744,403

(Note that the 2013 levy amounts are based on the maximum levy.  Those numbers could decrease).

We will be holding budget hearings over the next six weeks before we make final decisions on our budget and tax levies for 2013.  I’m hopeful we’ll take the opportunity to at least hold the line on tax increases for 2013.

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