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Crow Wing County Board: County attempts to reduce costs, generate revenue

The Crow Wing County Budget Committee drilled down to review the numbers behind the 2019 preliminary budget and levy the county board approved unanimously at its last board meeting.

Crow Wing County Finance Director Jason Rausch (left) gets detailed about the 2019 preliminary budget and levy at the Friday, Oct. 6, budget committee meeting as Commissioner Paul Koering leans in and Chairman Paul Thiede leans back across the desk from County Administrative Services DirectorDeborah Erickson and Commissioner Rosemary Franzen (right). Frank Lee / Brainerd Dispatch
Crow Wing County Finance Director Jason Rausch (left) gets detailed about the 2019 preliminary budget and levy at the Friday, Oct. 6, budget committee meeting as Commissioner Paul Koering leans in and Chairman Paul Thiede leans back across the desk from County Administrative Services Director Deborah Erickson and Commissioner Rosemary Franzen (right). Frank Lee / Brainerd Dispatch

The Crow Wing County Budget Committee drilled down to review the numbers behind the 2019 preliminary budget and levy the county board approved unanimously at its last board meeting.

At the heart of the Friday, Oct. 5, budget committee meeting was commissioners' desire to reduce the 2019 preliminary levy of 6.99 percent. In December, the board passed a reduced levy for 2018 for the eighth consecutive year.

"The levy has been flat for the last eight years. This county's budget for the last eight years has gone up every, single, year," Commissioner Paul Koering said.

County Finance Director Jason Rausch replied, "You do understand that in order to only grow the budget by 2 percent (annually)-and to have a zero levy-cuts did have to be made."

The levy revenues for the 2018 budget were $34.35 million while the levy revenues for the 2019 preliminary budget approved Sept. 25 is projected at $36.75 million, so the increase in the levy revenues from 2018 to 2019 would be $2.4 million.

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"You can't grow expenditures by 2 percent per year and have levy flat revenues without cutting some place in an organization, in a budget this big," Rausch said as he reviewed with commissioners the 5,000 line items in the preliminary budget during a two-hour meeting Friday.

According to the 2019 preliminary budget and levy presentation at the Sept. 25 meeting, it is expected the county fund balance would decrease by about $3.06 million.

Total revenue

Excluding unorganized townships, total revenue for the 2019 preliminary budget is projected to be $85.49 million, with property taxes comprising 43 percent-or $36.75 million-and money in the form of federal or state grants and aid comprising 34 percent of the total-or $28.62 million.

About 30 percent, or $11.01 million, of the property tax portion of the total county revenue for the 2019 budget will go to community services, while 25 percent, or $9.12 million, will go to public safety services, which are increases from the 2018 final budget approved in December.

"Sometimes government gets too big or bloated," Koering said of cuts.

Driving the county's 2019 preliminary budget are increasing methamphetamine use in the county and rising employee health insurance costs. Final approval of the budget occurs in December.

The county cost of out-of-home placements for children more than doubled from about $1.5 million in 2013 to $3.5 million in 2017, according to County Administrator Tim Houle.

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"That's a pretty scary trend. ... In previous years, we saw the charges for services going up in our jail, and we also saw our sales tax going up, so since those two went up, then our levy didn't have to," Rausch said.

For the first time in more than a dozen years, the county agreed in December to dip into its fund

balances-similar to savings accounts-for ongoing expenses amounting to about $748,000.

"Right now on your preliminary, you have a reduction in your budget and an increase in your levy, so it's completely flip-flopped from what it's been over the last eight years," County Administrative Services Director Deborah Erickson said.

Houle recommended at the Sept. 14 budget committee meeting a levy increase of 6.99 percent and told the board it had until December to find ways to lower that figure if commissioners wanted to.

The committee will discuss at its Nov. 2 meeting whether to raise fees the county charges for particular services. The total revenue the fees generated for the county was $2.3 million.

"If we decided to raise every single fee ... by 10 percent, we'd come up with $237,000 to offset our revenue increase-and a 1 percent change in our levy is $343,000, so you'd have to raise every fee in those areas by almost 15 percent to drop 1 percent of levy," Rausch said.

For example, the county gets about $10 or $15 of a $46 recording fee charged by land services that can only be used to buy technology for the county recorder's office; the difference goes to the state, according to Erickson.

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"That would be such a nice thing for the taxpayers to know that we aren't getting rich off this," Commissioner Rosemary Franzen said.

Rausch said, "I just wanted to put it into perspective how few fees that we actually collect. But is it a good idea to look through them and understand them? Yes, it is, and that's what we plan to do on Nov. 2."

Jail revenue

County Jail Administrator Heath Fosteson said at the Sept. 25 board meeting the revenue the county receives from the state for housing, for example, 10 inmates from the Minnesota Department of Corrections was about $200,000 annually.

But the state Legislature recently reduced a fifth-degree drug charge from a felony to a gross misdemeanor, so now more such offenders are lodged in the county jail rather than in state prisons, which reduces the number of beds to rent out to the Department of Corrections.

"The impact to the counties is dramatic," Thiede said of the $869,000 the county jail will receive for housing DOC inmates as of Friday.

Rausch said, "We are already seeing less prisoners coming in. ... Heath and his staff are projecting they're going to see approximately $1.3 million next year, so that already tells me that this year, they don't expect to probably bring in more than $1.3 (million) of the $1.5 (million) that they budgeted."

The 2019 preliminary budget is $88.63 million; the preliminary levy is $36.75 million-or a 6.99 percent increase from 2018. The estimated county tax rate in 2018 and 2019 is 31.74 percent and 32.30 percent, respectively.

"We need a 7 percent levy, and say we go, 'Let's just levy 17 percent, and we'll put the rest in the bank and invest it.' Why would you do that? ... You're overtaxing people and taking more than you need to run government," Koering said.

Erickson replied, "Correct. But we also need to make sure that we have enough in the bank that we could make payroll and that we can pay our bills. ... that can actually be spent. We have a lot of money in the bank ... but it's other people's money earning us interest."

The next budget committee meeting is Nov. 2. Expenditures for the 2018 county budget were

expected to increase by 1.85 percent compared to the 2017 budget, and non-levy revenues in

the amount of $52.03 million in 2018 were expected to increase by about 13 percent from 2017.

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