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Crow Wing County Board: For 8th consecutive year, county passes reduced levy

Crow Wing County Finance Director Jason Rausch presents the 2018 budget and levy summation to the county board at a public hearing Tuesday before a resolution to adopt the budget and levy was unanimously passed. Frank Lee / Brainerd Dispatch

The Crow Wing County Board unanimously passed a reduced levy for the eighth consecutive year after Tuesday's public hearing, at which no one spoke or asked questions.

The passage guarantees the streak of not increasing the tax burden on property owners in the county continues, as far as the county's portion.

"The property tax levy is the amount of money that we collect from the citizens of Crow Wing County—from the property owners within Crow Wing County—to fund the operations of Crow Wing County," County Administrator Tim Houle explained by way of introduction.

But the decision goes against the recommendation Finance Director Jason Rausch expressed at a September meeting about a preliminary level of at least a 2 percent increase.

And for the first time in more than a dozen years, the county will dip into its fund balances—similar to savings accounts—for ongoing expenses amounting to a projected $748,000.

"If the amount of the overall spending that the county is going to be engaged in, which is being proposed at a decrease of 0.09 percent, is your concern, then this is the meeting that you should remain at," Houle said at the start of the public hearing.

Only one county in the state bested Crow Wing County as to how little Minnesota counties' levies increased, according to Rausch, before discussing a capital improvement plan.

"These eight years of negative levy would not have been possible ... (without) working as a team, rather than independent departments as we used to be, in the past when I first started here," Rausch told the board.

The adopted levy at the end of Tuesday's county board meeting was $34.35 million. Last year's levy was $34.39 million or a decrease of 0.12 percent over 2016.

"Our preliminary levy was at 0 percent and we came in just a hair under that," said Rausch, who was referring to the September meeting at which it was decided to keep the overall levy flat.

Excluding unorganized townships, the total county revenue for the 2018 budget is $86.38 million, with property taxes comprising 40 percent of the total—or $34.35 million—and money in the form of federal or state grants and aid comprising 38 percent of the total—or $33.13 million.

"I would like to note that the investment portion of our revenues have increased due to making our investments a little bit more long-term than they were in the past ... so we are now bringing in a little bit more investment dollars and hopefully that continues in the future," Rausch said.

"I'd like to say that every dollar we bring in investment helps to reduce the property tax by that same amount, so the more we can make, the better."

About 27 percent, or $9.22 million, of the property tax portion of the total county revenue for the 2018 budget goes toward community services, while 24 percent, or $8.4 million, goes to public safety services in the final levy and budget approved.

"One slice that we've added on this year is the (Other Post-Employment Benefits) funding. The county board has made a policy or procedure to start to set aside $200,000 each year towards a peak that we will eventually come to with our retiree health insurance in 2039," Rausch said.

"Right now, that peak is estimated to be about $2.2 million, but with this funding that we're putting aside now, we should be able to hold that to about $1.9 million ... so that will help reduce that need of additional levy funds that we need in the future."

Excluding unorganized townships, the total county expenditures for 2018 is $87.76 million in the final adopted budget, with community services spending accounting for 30 percent, or $26.02 million, and highway services accounting for 24 percent, or $21.28 million, of the total expenses.

"You can really see that in community services, we're bringing in about $9 million in property tax, but we're truly expending $26 million, so that shows just how much federal and state funds are flowing through departments like that to help the citizens of our community," Rausch said.

Expenditures for the 2018 county budget will increase by 1.85 percent compared to the 2017 budget, and non-levy revenues in the amount of $52.03 million in 2018 will increase by about 13 percent from 2017.

"A lot of this increase is additional federal and state funds, and also additional sales-and-use tax through our 0.5 percent sales tax for highways, for roads," Rausch said of non-levy revenues.

The county is expected to spend more than it receives in revenue, which means it will run an unbalanced budget in 2018 if projections remain on track.

There was about a 21 percent increase in the 2018 budget for community services from the year before, accounting for a total of $9.22 million budgeted for next year, or 27 percent of the 2018 property tax portion of the county revenue.

"You see the large increase in community services. This is an increase that we needed to reallocate some of our levy dollars from other areas to cover the increased costs of out-of-home placement (of children in the county) and state-operated services (such as mental health care)," Rausch said.

Community services has run over budget at an average of $1.6 million each of the last three years.

"In the last couple of years, we've been relying on fund balance in that area to cover those increased costs. Now we're actually going to fund that, so that we're not using fund balance in that fund anymore," Rausch said.

In 2013, the county refinanced debt related to the 2004 building project, which resulted in the county judicial center. With a $5 million injection of cash reserves and a transfer of $1 million levy annually from the capital projects fund, the county was able to reduce the term by five years and interest costs by about $5 million.

"The county has set a course to do pay-as-you-go financing. We started a capital projects fund, and we've put levy dollars in the capital projects fund. If we continue to do that, I'm hoping that we will not have to issue debt anytime in the near future," Rausch said.

The county's debt levy is about 15 percent of the county's 2018 total levy, and the county's debt rating is still "AA" by Standard & Poor's Financial Services, a division of S&P Global that publishes financial research and analysis on stocks, bonds and commodities.

"They said that a AA rating is the same as the country of France or the United Kingdom ... and it's one notch under Apple," Rausch said. "I was like, 'Wow, that's pretty impressive.' I'm happy to say that over the last eight years, our bond rating has not changed. We are still a AA."

Commissioner Paul Thiede made the motion to adopt the final 2018 budget and levy, Commissioner Paul Koering seconded it, and all the commissioners voted in favor of it.

"The work that everybody does when it comes to this budget is amazing," Commissioner Doug Houge said before the vote. "I can't thank you enough for the efforts, and again just the way we work together at it, and it just makes it a much easier process, so thank you."