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County's financial situation looks bleak as budget process begins

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News Park Rapids,Minnesota 56470
Park Rapids Enterprise
County's financial situation looks bleak as budget process begins
Park Rapids Minnesota PO Box 111 56470

The dire picture of Hubbard County's economy is emerging as department heads begin their budgeting process for next year.

"I don't think we should be levying more money to take care of the state's shortfalls," said Hubbard County board member Cal Johannsen.


"I do not favor levying any more money than we levied this year," announced board chair Lyle Robinson.

And with that announcement, the board said it will tax Hubbard County citizens no more than last year.

But the fly in the county's ointment is that it entered into a three-year contract with its labor unions this winter guaranteeing employees 3 percent annual raises and promising to fund employee benefit packages at the same levels.

"The personnel benefits will exceed the levy," pointed out county coordinator Jack Paul.

"Departments will have to tell us how they'll make do," said Robinson. "The public is telling me their income is less. Do they get rid of the dog or do they get rid of the cat? They do what they have to, to survive."

Similarly, county departments must do the same, he said.

"We haven't done our mid-year correction but we're not even close to coming out on our budget," he said. In two weeks, the county will assess its financial condition and may enact further cuts.

"It's not going to be pretty," said commissioner Don Carlson.

"Our employees will be paid properly but there may be less of us and we may be working shortened work days," Robinson said.

"At least we'll see where we can go," board member Cal Johannsen said of the upcoming reckoning.

"I've never heard as much grumbling as I have this year. You can't even go for coffee anymore" without hearing an earful, he said.

"It's coming from past supporters that are saying, 'We can't do this anymore,'" Robinson said of the disaffected taxpayers.

"I'm hearing from people I've never heard from before," Johannsen agreed, adding it's "not the chronic complainers. We know who they are."

Many of those complaints are coming from property owners concerned that their assessed valuations are simply not in line with what the real estate market is showing.

"I'm thinking we should cut everyone's values by 25 percent and move on," Johannsen said.

"If we hired a commercial appraiser it would come closer to you than our assessed valuations," Robinson told Johannsen.

County Assessor Bob Hansen said he's found his office "high on some, low on some" assessments. There is a discrepancy between sales and listed prices on the market, he said. And homeowners see reductions in real estate prices so sellers can unload their properties, but there isn't enough market information to base a countywide reduction on skimpy sales figures, he said.

"It makes people feel better," Johannsen said.

"But it doesn't change your taxes; they remain the same," said Robinson.

And Hansen said an overall reduction could actually make people feel worse when their taxes don't decrease.

"It makes government look foolish when we have it (the taxable value) at $450,000 and they can't sell it for $270,000," commissioner Dick Devine said. "We look stupid."

But Hansen pointed out that property values usually lag behind the market by 18 months. "When values were escalating we were behind it, too," he said.

"I don't see how lowering everything 25 percent is going to change anything," said Carlson.

"I'm not opposed to lowering valuations 25 to 50 percent," Hansen said. "We have to have that market activity to show us that."

And when real estate sales have slowed to a trickle, that could be awhile, county commissioners agreed.

But it still won't change the tax picture. The county will once again levy more than $11 million to fund its operations for next year.

"Our health insurance is the killer," Robinson said. "If you eliminate the employee, you eliminate the health insurance."

And he said that is the goal behind the hiring freeze enacted last winter.

Assistant county coordinator Debbie Thompson said employees have consistently absorbed higher deductible limits in their health plans to keep the premiums down. Single plans now pay from $1,000 to $2,600 in deductible limits while family plans pay $1,000 to $5,800 annually.

Nevertheless, Auditor Pam Heeren presented figures estimating that health insurance premiums will rise 12 percent for 2010.

And, to avoid disparities in pay, the county will give both union and non-union employees 3 percent raises next year and the year after,