The Hubbard County Board approved a preliminary payable 2022 levy of $16,162,655 at their Sept. 21 meeting.
That’s a $712,655, or 4.6 percent, increase over the 2021 final levy of $15,450,00.
The truth in taxation meeting will be held at 6 p.m. Tuesday, Dec. 14 in the Hubbard County Government Center.
County Administrator Jeff Cadwell reviewed property tax rates, tax capacity and county levies from the past seven years.
Since 2017, the property tax rate has “steadily and regularly declined” from 41.5 percent to the proposed 38.7 percent in 2022.
Between 2017 and 2022, the county levy increase has averaged 3.08 percent, he continued.
“Because of the healthy and diverse economy, new tax capacity has averaged 1.14 percent over the same period of time.”
Cadwell introduced a “net levy increase concept” to county commissioners. New tax capacity carries some of the levy burden, he said, subtracting the 1.14 percent new capacity from the 3.08 percent levy increase. This results in an average net levy increase of 1.82 percent annually.
Last year, for example, when the county approved a 0 percent levy increase, “it ended up being about a 1 percent reduction on everybody’s property taxes” because of the 1 percent new tax capacity.
“And last year, that was an appropriate choice,” Cadwell said.
Enbridge’s Line 3 pipeline will add to the 2022 new construction tax capacity, which the county “can capture for capital projects, economic development and other unfunded initiatives at the board’s desire,” Cadwell said.
The county saw approximately $41 million in new construction in 2021. Cadwell pointed out this is a conservative figure.
“Multiple that by 10 for Line 3,” he said of next year. “We would have 10 percent new construction tax capacity” compared to the average 1 percent.
In order to capture 5 percent of that new capacity, the board would have to add 5 percent to its typical levy increase of 3 to 4 percent, he continued.
“That 5 percent is all going to fall on Enbridge,” Cadwell explained. “One percent would fall against the other new growth, and 2 to 3 percent would fall against the rest of the tax base.”
Cadwell said he and County Auditor-Treasurer Kay Rave have met with Enbridge officials. A review with an Enbridge tax specialist was slated for this week.
Next fall, if the board leaves its levy increase at 3 percent, “then everyone will get a 5 or 6 percent discount on their taxes,” Cadwell said. “That’s certainly one policy option. … That’s a conversation we’ll have to have over the course of the year as we get those numbers.”
Valuation of Line 3 will be available early next year. “We just have estimates, at this point,” he said. “This is that once-in-a-lifetime opportunity, much the same way the ARP (American Rescue Plan) is.”
Cadwell said the county could potentially gain $3 million in taxes.
“When you look through the counties that are impacted by Line 3, you all know this. We’re the biggest winners of all the counties in the change of our current tax capacity,” he said.
County commissioner Tom Krueger said he’s interested in learning more about the relationship between tax capacity and the levy.
Board chair Dave De La Hunt said the tricky part is assuming that nothing changes or everything changes equally across all taxpayers, then net tax capacity reduces everyone’s taxes. “But that’s not the way it works because everything is moving. It’s all dynamic,” he said.
The board agreed to discuss it more at a work session.
The preliminary 2022 budget anticipates $39,011,190 in total revenue, with $42,726,077 in total expenditures.
General fund revenue comprises $15,684,538 of the proposed budget, with expenses of $15,692,253. Road and bridge fund revenue is estimated at $14,175,841 with $16,050,557 in expenditures. Next year’s revenue for Social Services is calculated at $7,104,333 with $8,901,679 in expenses. The Solid Waste fund projects $4,188,200 in revenues and $4,390,280 in expenses. Tax-forfeited land revenue is estimated at $1,940,800 with $1,796,969 in expenditures.
County commissioner Ted Van Kempen commented that a 4.6 percent increase is “modest” after asking county departments to cut 20 percent from their budgets last year.