Hennepin Property Tax Levy to Increase

Written by Jeff Johnson on September 11, 2009. Posted in General

 On Tuesday, the Hennepin County Board voted 6 – 1 (I was the “no” vote) to set our maximum property tax levy increase for 2010 at 4.95%.  This means that when we set our 2010 budget later in the year, we can increase the levy by 4.95% or less, but we cannot go over that amount.  In the recent past, the final level has been set at or very near the maximum level nearly every year.  I would expect this year will be the same.

Below is the Star Tribune story on the vote.

Battening the hatches for the sea of red ink they fear will rise even higher, Hennepin County commissioners on Tuesday approved a 4.95 percent increase in the property tax levy ceiling for 2010 to cover mounting medical costs and the potential for more state aid cuts.

“Flexibility” was the word most commissioners used in explaining why they supported the 4.95 percent increase in the maximum levy the county can collect, as recommended by County Administrator Richard Johnson.

The County Board now may decide on a final levy that is under that figure, but not over it.

“It’s a painful budget for painful times,” said Commissioner Jan Callison, noting that a 3 percent levy increase would be preferable but somewhat risky given the anticipated forecast of another massive state budget shortfall.

Jeff Johnson, the only commissioner to vote against setting the ceiling at a 4.95 percent increase, proposed 3 percent instead.

“No matter where I look, my constituents are struggling … and their property taxes weigh very heavily on them right now,” he said. But the rest of the board rejected Commissioner Johnson’s amendment.

My intent going into the meeting was to move for a 0% increase in the budget, but after hearing three of my colleagues speak before I made my proposal, it became obvious to me that 0% had no chance.  Unfortunately, 3% had no chance in the end, either.

Dissecting the potential 4.95 percent levy increase, Board Chairman Mike Opat said that 3 percent was a reasonable amount to backstop expected increases in medical expenses, and an additional 1.95 percent was acceptable given the state’s poor economic prospects.

“In the wars of one-upmanship in St. Paul, we’re a casualty,” Opat said.

Under the new ceiling, the county will able to collect up to $676.2 million in property taxes, compared with $644.3 million this year.

None of the 4.95 percent property tax increase would go toward the county’s operating budget, Johnson, the county administrator said. It would raise about $32 million, $18.5 million of which would go to Hennepin County Medical Center (“HCMC”). Even then, Opat said, that would cover only about half of the amount that the state typically reimburses the hospital for care for the poor and uninsured.

Much of that funding is slated to disappear next year because of Gov. Tim Pawlenty’s veto last spring of General Assistance Medical Care (GAMC), the state’s health care program for poor adults.

The administration and staff did find a way to balance the non-HCMC portion of the budget without increasing the levy.  I think that’s fantastic – and likely something some would have said was impossible a year ago based on a belief that we had cut all the fat out of county government already.  That admirable goal of moving forward without increasing the burden on our taxpayers, however, should be extended to the entire budget, not just a portion of it.

“We’re in the worst recession since the Great Depression … [and] we need to make sure we maintain our capacity to be that safety net in Hennepin County,” Commissioner Peter McLaughlin said.

This point is debatable, but no one can question that the economy is in terrible shape and many people are struggling.  If there was ever a time to refrain from an increase in property taxes, this would be it.  Unlike the income tax, even those who have lost their job are required to pay property taxes.

Under a levy increase of 4.95 percent, a Minneapolis taxpayer with a home at the median market value of $190,600 would pay 4.1 percent more than this year to the county, or about $30. A homeowner in suburban Hennepin County with a residence valued at the market median of $252,800 would owe the county 0.4 percent less, amounting to a savings of $4 next year. Those figures don’t include additional property taxes levied by cities and school districts.

The difference between Minneapolis and the suburbs stems from changes in market value. The median house value went down proportionately more in the suburbs during the past year.

Johnson will present a proposed 2010 budget to the board on Sept. 29. The board will approve the budget and levy on Dec. 15.

What this story did not discuss was the fact that the board also voted to raise two other county property tax levies.  The Hennepin County Regional Railroad Authority (“HCRRA”) levy is used mostly to fund light rail trains and the Hennepin County Housing and Redevelopment Authority (“HCHRA”) levy is used for housing programs.   The HCRRA levy increased over 110% and the HCHRA levy increased nearly 200%.   I was the only vote against these two levy increases.  Although the dollar figures devoted to these two levies are a tiny fraction of the county levy mentioned above, I believe it’s still important to note that they are moving rapidly in the wrong direction.

Bottom line: I’ve heard a lot of talk the past few weeks about the needs of county government, the needs of HCMC and the needs of those who receive government benefits.  I’ve heard much less talk about the needs of the taxpayers who fund county government, HCMC and the government programs that provide those benefits.  I’m hopeful as we move forward toward a final levy decision in December we place a little more emphasis on the well-being of Hennepin County taxpayers.

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