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County adopts 2011 budget

The recession's effect was in play as Crow Wing County commissioners adopted the budget and set tax levy for 2011.

The board and staff have been working for a budget reflecting no growth in spending. In the final moments of Tuesday's budget talks with proposed budget prepared, the board cut another $500,000.

The county's proposed levy reflected a zero percent increase from 2010 with staff presenting a 2011 budget of $67,491,709 and a tax levy of $36,221,696.

The zero percent increase represented the lowest percentage increase in 14 years, the county reported, and is the fourth consecutive year the county has approved a levy increase of 3 percent or less.

After the budget discussion was concluding, Commissioner Paul Thiede suggested not setting aside the planned $500,000 for the retiree health liability known as other post employment benefits. This would have been the third consecutive year the county set aside funds for a looming bill. Thiede advocated not collecting the money now and leaving it in the taxpayer's pockets. For a $100,000 homestead, the reduction of the $500,000 funding for OPEB would mean a $4 reduction for the homeowner.

Also in the balance, Tim Houle, administrator, noted the Department of Corrections just reported it won't be placing jail inmates in the county jail in 2011 meaning there will be a loss of about $400,000 from anticipated revenue.

Auditor Deborah Erickson said there is a compelling argument to bank the OPEB dollars to shave the peaks from the high levels coming years down the road. Erickson said the board recently heard the bottom of the recession is not expected to hit until 2013.

Commissioner Rachel Reabe Nystrom said to drop out of putting money away for OPEB for a year isn't being responsible. Board Chairman Phil Trusty was willing to split the difference and drop the OPEB fund to $250,000. Commissioner Rosemary Franzen said while $500,000 sounds good in a cut it becomes a small amount divided down and she questioned what it would do for the future. Franzen said her grandchildren will probably end up paying the bill down the road. Nystrom said if Thiede stood on the corner and gave everyone a dollar bill it would be about as effective.

Commissioner Doug Houge said it is one area where the board can show it is taking the budget seriously and it can get back to that fund in the future. Mike Carlson, deputy auditor, said the decision was a policy one and he didn't see it as detrimental to the county. Don Ryan, county attorney, noted the change in the county's way of doing business in setting money aside instead of taxing when the money is needed. Ryan noted having the money set aside for the future debt does affect the county's bond rating.

Thiede's amendment passed with Nystrom opposed. The amended budget was then passed with Nystrom opposed.

Erickson said the zero percent increase was accomplished without counting on any of the $2.8 million the state may provide. The state is facing its own expected $6.2 billion budget shortfall, leaving the county leery of depending on the state for revenues.

Decreasing property values mean the county's net tax capacity for 2011 will drop 7.3 percent from payable 2010.

It turned out most people attending the meeting were interested in the market valuation. Out of about 15 people all but two left after Erickson informed them the meeting was to discuss the county's budget and levy not the market valuation. County staff were on hand to answer their questions in the nearby Land Services building.

Trusty said he wished more people were on hand to be interested in the budget and tax levy and came with suggestions. Tuesday, the board changed its regular time from 9 a.m. to 4 p.m. in order to transition to the 6 p.m. public hearing on the budget to be more accessible to people.

One man, who identified himself as L. Johnson from Ramsey County, said he came several hundred miles to attend the public budget meeting, noting his four small pieces of property are seeing tax increases of 7.3 to 8.1 percent in an economy where the real estate market is going down. The man said he was shocked at estimated taxes for 2011 showing the proposed increase. He said his Ramsey County tax bill was less. And Johnson said he was getting this increase at a time when his income was not increasing.

"That brings me here to see what kind of budget you people are putting together," he said. The man said the reduction in staff hasn't appeared to correspond to a reduced labor cost to which the county pointed out that not all labor groups re-negotiated their contracts.

Vic Kreuziger, Pequot Lakes, said cost of living, food and gas is going up but incomes are not and people are being squeezed. He urged the county to cut its budget further, particularly health and human services spending but he urged funding for veterans and road/bridge be maintained. Welfare and child support collection sounded like money down the drain, Kreuziger said.

With the adopted and amended budget, the county tax rate will decrease to 29.737 percent. In 2010, the county had the third lowest county tax rate in the state at 28.029 percent.

 Erickson said even though the market value is going down, by about 5 percent for residential properties, that doesn't mean a corresponding reduction in taxes. She used the analogy of buying a pie for a gathering one night and then buying another pie again the next day. Even though the size of the pie and its cost didn't change, the fact that fewer people were there to partake the second day meant the cost per pie piece went up.

RENEE RICHARDSON may be reached at or 855-5852.