Last year, owners of commercial parcels complained about taxes at the county taxation hearing-- and this year the farmers took their turn, voicing concerns at last week’s county tax hearing about property tax hikes. The County Board listened December 5 as mostly ag land owners questioned their property tax statements. County Administrator Bruce Messelt said the county, as the “mailman” for tax statements takes the brunt of complaints at tax time; but their ire was being mis-directed. Messelt explained that concerns can be traced to recent state tax law changes. In the case of agricultural parcels-- farmers who don’t enroll acreage into “Rural Preserve” are seeing some of what they may have gotten as a tax credit will expire for 2013. New state laws separated 2A productive and 2B non-productive (or non-income producing) acres. If you don’t enroll the 2B lands, they come off the old Green Acres status. Ag land owners are encouraged to contact the assessor’s office and get details about enrolling into Rural Preserve.
The deadline is May 1. Messelt continued saying that other state law revisions affected the ability to fund the local levies. Based on the legislature’s adoption of the new Homestead Exclusion method-- which eliminated homestead credit -- Chisago County lost five percent of tax revenues right off the top. The county’s total market valuation before state lawmakers enacted the new formula was $4.2 billion. Under the new exclusion system-- which calls for an upfront “exclusion” or on-paper reduction of a percentage of value of lesser cost homestead properties-- Chisago County’s total valuation dropped to $3.775 billion. The ability to raise tax revenue is based on valuation, and a tax rate, which varies depending on what city or school district you reside in, and on what type or classifications of parcel you own (residential, seasonal, commercial, etc.) These properties are put into the formula at different multipliers. A county like Chisago is hit hard by this new exclusion system designed to work
most effectively in areas with greater diversity in land uses. The state no longer distributes actual revenues from its income, sales and state property tax collections, to help buydown local property taxes. Chisago County jurisdictions (cities, townships, and the county, etc.) used to get $3.2 million total in homestead credit aid through the old system. Now, the state keeps the money and just tells assessors to calculate homestead valuations using the exclusion factors. The tax hearing audience was advised that less cash is collectable when the county’s overall property taxable valuation is affected up front. Even if the county vastly reduced its budget it still needs to generate more revenue locally-- and so the burden “shifts” to non-residential parcels. Commissioner Ben Montzka said shifting expenses to the property tax is a “regressive” way of addressing the funding of government. Montzka said counties can’t collect income or sales tax, which are more “progressive” taxing methods actually based somewhat on people’s ability to pay. Residents complained that it wasn’t right; as farmer Earl Faulkner stated, “To just be able to reach into my pocket and take 21 percent more money.” Montzka responded that the county is actually going to adopt a levy for 2013 that’s almost $300,000 less than the 2012 levy, and also said the county levy has been frozen for three prior years. The increase this farmer is experiencing isn’t the result of any growth in local spending, Montzka declared. Commissioner George McMahon added, “They (legislature) balanced the state books on the backs of local property taxpayers.”
The county commissioners will act on the final levy next week and took public comment only at last week’s meeting. Some other information presented, included: ~ The levy is proposed to drop to $31.3 million. For 2009, 2010 and 2011 this was $31.6 million. ~ The budget includes reductions in the few areas where county government can use discretion-- such as Historical Society and Ag Society funding. Messelt noted the senior center, Youth Service Bureau and animal control are also somewhat discretionary programs no longer budgeted for county assistance. Other areas of the county budget involve public safety, transportation, the courts, public health and administering dollars appropriated for federal and state programs. ~ Fund balances for cash flow are around the minimum recommended (35 to 50 percent of annual expenses). Messelt explained that the county’s AA2 bond rating is partly predicated on having healthy fund balances, and a strong bond rating saves on interest charged on borrowing. ~ County staff numbers have declined the last few years from 367 to 330. ~ The entire proposed 2013 county budget, including local levy and all outside revenue sources, is $51,716,303. In 2009 this was $56 million.