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County's 2010 budget planned without state program aid

Hubbard County's first Truth in Taxation meeting in years didn't go quite as planned and most assuredly wasn't timed to coincide with the state's announcement of a projected $1.2 billion shortfall Wednesday, but it was nevertheless a glimpse into Minnesota's future.

Several county residents showed up, tax statements in hand, to question their valuations when the taxation meeting was scheduled only to discuss the county's levy and budget, not address individual complaints about property values. All were concerned about their valuations, and their ability to pay their taxes.

Hubbard County has not been required to hold such meetings in the past few years because it has only incrementally raised its levy. But the state now mandates annual Truth in Taxation meetings.

While Gov. Tim Pawlenty was addressing the state shortfall Wednesday and vowing more local governmental cuts would be required to shave a deficit projected to grow to $5.4 billion by 2013, Hubbard County Auditor Pam Heeren said the county's 2010 budget was planned without any County Program Aid, state monies that have bolstered local economies in the past.

"If we get any (of those funds) it will be a bonus," she said. The amount would have been nearly $280,000.

But like the state, Hubbard County has an aging population that is in need of increasing services taxpayers may not be able to afford. And, like the state, Hubbard County incomes are down, more residents are unemployed, income taxes have lagged and the unemployed or underemployed are putting a strain on welfare programs.

"One thing we need from the public is not to come in and ask for services we can't provide," Hubbard County board chair Lyle Robinson told the taxation meeting attendees.

But he added the county is obligated to provide mandated benefits. "It's essential we follow the law," he said.

Cuts to Local Government Aid (to cities) have caused property taxes to rise, but that will occur only in isolated pockets of Hubbard County, not because the levy has risen - it hasn't - but because of new tax classifications created in the state, especially for agricultural property and veterans and the expiration of some tax breaks.

The Hubbard County board is sticking with an essentially zero-growth budget, although board members grudgingly agreed to raise the salaries of the county's non-union employees, roughly one-third of the workforce, and elected officials, the county attorney and sheriff, by 3 percent. That is what union employees will receive through a contract negotiated last year.

County commissioners bit the bullet and declined to raise their own salaries. They are among the lowest paid county officials in the state and have not received a raise since 2005. Their annual salaries are $15,500. They receive per diem expenses for attending committee meetings, mileage, meal reimbursement and health insurance, however.

County engineer David Olsonawski said the public works department has some federal funds for 2010 projects, but he doesn't expect any more in the years after that.

Earlier Wednesday Heeren presented a general fund cash balance report showing revenues, as of Nov. 30, up about $63,000 over the same time last year while expenditures were $880,000 above this time in 2008. The "reserved fund" spending was up slightly in 2009, reducing that fund by about $123,000 over last year. And the county's undesignated cash balance as of Nov. 30 was about $2.5 million, compared to $4.35 million at this time last year.

But Heeren said spending those funds down a bit was not necessarily a bad thing when states don't want to see counties sitting on piles of unused funds.

Overall, the county's financial picture is good with the exception of interest on its investments, Heeren said.

"In 2007 we earned $1 million in interest," she said at the tax meeting, "Today we'll be lucky to get a fourth of that."

"Our department heads really pulled together to make this year successful," Robinson said.

"We could cut valuations in half tonight but your taxes will be the same," Robinson told the taxpayers at the meeting. "It's the money spent" that figures into the tax burden, not the property valuation, he explained. Commissioners have taken a hard line on spending this year, scrutinizing departmental expenditures.

Hubbard County's proposed tax capacity rate for 2010 is the lowest of the surrounding four-county area. But taxpayers still voiced some concerns.

Most vocal was former county commissioner Ed DeLaHunt.

"Where do we go to get justification for something that's totally off the wall?" he inquired of the county board.

"I have a 50-foot piece of lakeshore that's good for nothing," DeLaHunt complained. "There hasn't been a 50-foot lot sold on Long Lake for 30 years. You guys have refused to let me put them together," he said of the contiguous property he owns. "Sixty-four thousand, five hundred for a lot you can't use," DeLaHunt complained. "Hallelujah."

Advised that he can't combine the land because it's from two separate plats, Heeren and assessor Bob Hansen said DeLaHunt could hire an attorney, combine the parcels into a new plat at his own expense, and resolve the issue. In either case, DeLaHunt admitted his taxes would be the same, whether the parcels were individually valued or the entire parcel was.

The local radio station owner predicted the county hasn't seen the worst of the recession.

"You have no idea how bad it'll get this winter," he told the board. "Right now there's not a single bank in this town loaning," DeLaHunt said. "We tried to get a bridge loan to get us through the winter" but were unsuccessful, he claims.

He criticized the county for its space needs study, which initially suggested building a new two-story office building to solve the overcrowding in the main county building and advised the board to rent vacant space in the city.

"We're not gonna build anything," Robinson assured him.

"I don't think we can afford to spend anything anywhere," DeLaHunt reiterated. "As I look at this budget you guys have done a great job."