A third meeting Monday concerning a potential property tax increase for Unorganized Territory residents drew a smaller crowd, but took on a more contentious tone.
The Crow Wing County Board hosted the meeting at the land services building, occurring in the wake of a severe thunderstorm that left much of the Unorganized Territory without power. The county board serves as the township board for the unorganized area
County Engineer Tim Bray led the session seeking input on an impending funding crunch for road construction in Unorganized Territory, also known as the First Assessment District. Based on current expenditures and township-level property taxes levied, county officials estimate no funds would remain for road construction by 2021 without a tax increase.
Among the myriad concerns brought forth to the board, many of the questions focused on the management of funds for the territory. Several residents expressed frustrations with a lack of agency they seemed to feel over the decisionmaking, one noting no one on the county board lives within the district.
The unorganized area is the third largest population center in the county behind Brainerd and Baxter and contains the highest number of township road miles-58-in comparison to the 29 other organized townships. Because the area between Baxter and Nisswa is not an organized city or township, the county board is the governing body. County officials have noted the area is by far the most populated Unorganized Territory in the state.
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To fully fund road construction and preservation assumed necessary to deliver a level of service comparable to that provided by the county and other area municipalities, Bray said, it is likely a three- to four-year period of significant property tax increases will be needed. Possible ranges are from 12-18 percent annually. This may be followed by more moderate increases of 4-5 percent annually over the next six to seven years.
Tax trouble
Until the county's realization of Unorganized Territory's future funding woes, its residents have enjoyed some of the lowest per capita levy rates of all townships. With 5,488 residents, it ranks 26th out of 30 for its road and bridge levy, and 29th out of 30 for its total levy per capita. Center, Timothy, Perry Lake and Fort Ripley townships are the only ones ranking lower in road and bridge levy per capita, and each has less than 1,000 residents. Timothy Township has just 140 residents.
What's driving the potential need to raise the Unorganized levy by $500,000, an increase of 66 percent? It's a combination of past accounting errors allowing county tax dollars to subsidize the unorganized township's road work and spendable funds from the area's savings account dwindling over the next four years, Bray said.
Before an overhaul of the county's financial practices, lax accounting led to incorrect billing to township funds-meaning work completed exclusively for township resources was sometimes paid for from the county's revenue, rather than that collected at the township level. This led to a large fund balance, which at its peak topped $3 million, of unspent tax dollars. The construction scheduled for completion through 2020 will be paid for from this fund, drawing it down to 30 percent of the township's overall budget.
Bray explained the potential increases applied only to the residents' township levy-not their entire tax bill, consisting of taxes levied by the county, school district and special taxing districts. He noted a series of assumptions were made to develop the proposal, including a 20-year construction cycle for township roads and the completion of 3 miles of overlay and seal coating each year.
Based on calculations, township property taxes on the average residential homestead property would more than double over the next decade, from $183 to $379 by 2027. Averaged over 10 years, this amounts to a nearly $20 increase annually. Without increases, the property tax levy would continue to pay for fire coverage, administration and maintenance-such as snowplowing, grading and mowing-but could not support construction.
These assumptions could be changed depending on the desire of residents, Bray said, whether that means overlaying less miles or doing so less frequently.
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Conversation veers many directions
Ranging from the specifics of less than $2,000 spent on miscellaneous maintenance to seasonal property tax rates set by the state to the reasons behind the administrative costs charged to Unorganized Territory residents, concerns brought forth covered a wide range and spanned more than two hours.
Resident Harold Whirley suggested the situation might not be as dire as it appeared, adding his perception was the county started spending more money on the township once it collected more. Bray responded his projections were based on the condition of the system, noting less might have been spent in the past, but that's partly what created the maintenance concerns the county is now dealing with.
Whirley took the microphone from the stand and approached the projection, emphasizing his points, before echoing the infamous line of former President George H. W. Bush's: "Read my lips, no new taxes," Whirley said to commissioners.
Commissioner Paul Koering grabbed the microphone from him to respond.
"No new roads, then," Koering said. "We'll turn them all to dirt, then."
Resident Gary Thompson spoke about the condition of St. Colombo Road, which is scheduled for replacement in 2020. Thompson said he and other residents of the road believe the work should be completed sooner. Bray said he receives phone calls almost every day from people who believe the same about their own roads. He said the lists are made with two considerations in mind: those in the worst condition, but also those in proximity to other projects to group together contracts for road construction.
"It isn't really the squeakiest wheel that gets the grease," Bray said.
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A comment receiving the most reaction from the crowd of about 30 people was one made by a seasonal resident from Birchdale Road, who spoke at length on several matters. The resident was concerned no one on the county board lived in the district. County Administrator Tim Houle explained this was a function of the unorganized nature of the First Assessment District. She responded by asking whether it would be cheaper for residents if the area were to organize into a township or city. An immediate reaction from others in attendance appeared to show most felt this would not be the case.
The county board has no immediate plans to make a final decision on how to address the impending funding shortfall, although the preliminary property tax levies must be set in September.
