Many Crow Wing County businesses and residents can expect some property tax relief following county board actions at an emergency meeting Friday, April 3.
Targeting businesses subject to closure orders from Gov. Tim Walz and homeowners who’ve been laid off amid the COVID-19 pandemic, the board unanimously approved a process allowing taxpayers to apply for a penalty waiver for property taxes due May 15. Those approved for the waiver will have until July 15 to pay property taxes without the threat of late fees or interest.
During the meeting, closed to the public due to social distancing guidelines, County Administrator Tim Houle explained to the board the waiver as proposed would not apply to all businesses and residents in Crow Wing County. Listed in the proposal are restaurants, bars, fitness centers, bowling alleys, salons and theaters. The waiver would apply to non-escrowed commercial and homesteaded properties, meaning property taxes are not rolled into those taxpayers’ mortgages. Those eligible can apply through the end of April. Houle said there will be an appeals process as well for those denied a waiver, and appeals will be considered with enough lead time for taxpayers to know whether they’ll need to pay by May 15.
How to apply for a waiver
Visit crowwing.us/TaxPenaltyWaiver to apply for a waiver of penalties and interest on late first-half property tax payments in Crow Wing County.
“There are businesses in our community that are hurting,” Houle said. “We’re going to present a proposal for you today to try to provide some targeted relief to those we can most easily identify. This will not be in a comprehensive package. This will not provide relief to every business in our community.
“There are going to be people who are hurting, who are not covered by what we're going to do, or what we would propose to do. It will be messy, I need you to understand that it's not going to be a clean process. It would be a messy process.”
An analysis of the potential tax impacts and its effect on cash flow for the county presented by Land Services Director Gary Griffin showed an estimated $1.1 million in commercial tax would be deferred until July 15. Griffin said the proposal as it stands would allow cash flow to continue, meaning the county could continue to pay ongoing expenses such as salaries for its employees.
“If we stick with the targeted businesses that we’re discussing here today, we should be fine with our cash flow, as long as eventually they do pay,” Griffin said. “ … It’s a different discussion if we get non-pay rates, you know, in double digits. We’ll be having a different discussion probably.”
Griffin said the analysis in part took into consideration the impact of the Great Recession on late tax payments as well as unemployment numbers from that time period. With unemployment projected to be as high was 30% by mid-June, according to the Federal Reserve, Griffin said he’s expecting uncollected property taxes to be as high as 11% across all property types.
Commissioner Bill Brekken asked whether establishing property tax installment plans was an option.
“We’ll be surprised at which businesses are really struggling with that cash flow,” Brekken said. “So is there a way we can approach each of these on an individual basis as we do some of this evaluation and set up some kind of payment plan for them, if they’re really struggling?”
Griffin said that’s an option, but would be quite the undertaking from an administrative standpoint. He said as the situation evolves, there may be other options to provide relief in a different way, such as abating penalties and interest at the end of the year if taxpayers are unable to pay.
Chairman Paul Koering said he thought it was important for the county board to focus on the proposal at hand, noting the decisions commissioners make on property taxes affects multiple jurisdictions, not only Crow Wing County.
“We’ve got to really be careful, because this isn’t just Crow Wing County, this affects the school district,” Koering said. “If we start doing this, this might put the school district in a cash crunch, too. Townships, cities — this is not just Crow Wing County. So I think it’s a way we’re trying to help, but this is, this is a difficult situation.”
Houle said he reached out to the three major school districts in Crow Wing County along with cities and townships to discuss the proposal. He said the large cities in the county appear to be in “pretty decent shape” with adequate fund balances, but school districts are struggling more.
“I will tell you that it’s a challenge for the school districts to cash flow. And the issue for us is we collect this money in May, and it has to last us until the second half collections (in October), and that's the same for school districts,” Houle said. “School districts in particular are suffering as well because they are now obligated to provide day care that they cannot generate revenue on, they can't charge anybody. They are obligated to provide school lunches. … They’ve invested significantly in technology to allow for distance learning, which is something they had not planned to do.
“And so for some of those school districts, it’s nip and tuck but they have told me they think they can weather that. And I think they all know — all the cities, all the townships, all those school districts — that these are extraordinary times. And so I also heard a fair amount of support from them saying it was the right thing to do.”
Commissioner Doug Houge asked whether loans and grants currently offered to businesses at the state and federal levels might help businesses pay their property taxes, and if so, if that could be taken into consideration when deciding whether to waive fees and interest. Houge said this may help the potential cash flow issue, if those businesses are able to pay their taxes on time. Griffin reiterated the analysis showing cash flow should be maintained with the proposal as it stands.
Houle said while the county is offering this relief, he’s asking those who can pay their taxes to do so.
“This is a time when we’re asking people to be the best citizens, the best form of themselves that they can be. And so even for targeted businesses, if they don't need the relief, we would ask them to pay their taxes. That's really what it boils down to,” Houle said. “ … Those of the rest of us who are fortunate to have had neither of the wages in our family affected by this, we need you to be good citizens. Pay your taxes. … That is how we provide emergency services, that is how we provide for snow plow drivers, that is how we provide for law enforcement, for the jail and for essential services for our community.”
Koering relayed a story of a family with children in Crow Wing County who reached out to him. Both parents are laid off, and while they can pay the bills this month, next month is an unknown.
“That’s an example, and that’s a true story of somebody and there’s thousands of those examples, I believe, in Crow Wing County,” Koering said. “This is our, the county board’s, one thing we can try to do to help in a small way.”
Changes to liquor license fees
Another unanimous action by the board Friday established a four-month reduction in the upcoming liquor license renewal fee for those businesses licensed by Crow Wing County.
That includes 23 establishments located in townships, including the unorganized territories. The measure does not apply to any of those establishments located in cities, because those are licensed by the respective jurisdictions.
The reductions amount to $700 for those licensed for on-sale and Sunday sales, and $816.67 for those licensed for both on-sale and Sunday sales, along with off-sale. The reductions would apply to the upcoming license year, which begins July 1. Typically, liquor licenses cost $2,100 or $2,450 for off-sale combination licenses.
In addition, the board suspended a county ordinance requiring liquor establishments be current on their taxes to be licensed. State statute requiring businesses not be delinquent on taxes — meaning all taxes would need to be paid by Dec. 31 — would still apply.
Houge asked whether by offering this fee change to the 23 businesses licensed by the county, it was giving them an unfair advantage. Administrative Services Director Deborah Erickson said she had not yet reached out to cities to discuss the issue but would do so if the board took action. Houle said it wouldn’t be the county’s decision to make changes to city liquor licensure.
“I think it’s important that we do show some leadership here, that we move forward with a proposal here,” said Commissioner Steve Barrows. “I think that other units of government will have the opportunity to search their souls for what they might be able to do to help their businesses and residents.”
Board freezes capital projects
Capital projects not yet started and equipment purchases not yet made in 2020 are suspended following another unanimous county board action Friday.
The total cost of those projects was set to be $908,500. Houle asked for the authority to resume capital expenditures in July, if finances are in decent shape at that time, but noted the freeze will likely extend through the remainder of the year.
Among the highest dollar projects suspended are improvements to heating, ventilation and air conditioning, a backup boiler, enhancements to the storage network for the information technology department and redesigns to business intelligence technology tools.
Putting off these projects will make it easier for the county to redirect those resources to likely expenditures associated with response to COVID-19, Houle said.
“We know that we’re going to spend money on our COVID responses. We already have begun to do so,” Houle said. “We also know that we may have a reduction in tax collections. And so this is a preemptive measure in anticipation of alternative spending, and still trying to live within our means and not dip into fund balance. There may be other measures that we will want to take down the line. But this one I think, is sort of if you will, lower hanging fruit.”