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Hubbard County officials explain 19% tax levy increase

Property value increases from a hot housing market caused higher property taxes, explained Hubbard County Administrator Jeff Cadwell, not the 10% capture of new construction tax capacity in the proposed 2023 tax levy.

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At $19,100,000, Hubbard County’s proposed property tax levy for 2023 is a 19% increase from last year.

That’s a $3.1 million increase compared to 2022’s $16,050,000 final levy.

Ten percent of the levy increase – roughly $1.6 million – is a capture of new construction tax capacity from Enbridge’s Line 3 project.

Hubbard County Auditor Kay Rave and County Administrator Jeff Cadwell presented the latest figures, budget “drivers” and other factors at the Dec. 8 truth-in-taxation hearing.

The board will set the final levy and budget at its Tuesday, Dec. 20 meeting.

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Cadwell said, “This year, we’re showing capturing $1.6 million in capital reserves for future capital improvement and economic development purposes. That’s new this year.”

According to Cadwell, Enbridge’s investment was between $250 and $300 million when it laid 50 miles of new pipeline in Hubbard County.

Calling it “a significant opportunity,” he said the tax capacity increase from Line 3 alone allows the county to capture 10% of a levy increase and set aside those funds for future capital needs.

New tax capacity can only be captured in the year that it happens, he explained. If the county phased it over years, then every taxpayer would be impacted.

“It really is pre-planning at a time when we have somebody else [Enbridge] can pay a portion of that bill, so that when we have a major improvement or repair, we don’t have to raise the taxes to support that,” Cadwell said.

The county’s 2023 budget estimates revenues of $30,086,878 and expenditures of $54,895,960, including $818,100 toward debt payments. The county plans to use $5,708,982 of its fund balances in 2023.

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For every dollar paid in taxes, 37 cents goes to the sheriff's office, 19 cents to the general fund, 17 cents to roads and bridges, 14 cents to social services, 9 cents to capital reserves and 4 cents to debt service.
Contributed/Hubbard County Auditor's Office

The largest portion of expenditures (32%) is by the county highway department. Cadwell explained that’s the result of “a significant number” of road and bridge projects to be delivered in 2023.

The highway department also receives the greatest revenue from other resources (37%), such as gas taxes, federal or state grants, he continued.

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Of the county’s $54 million in expenses, approximately 34% is supported by the levy. “The rest of it comes from other revenues,” Cadwell said.

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Hubbard County Administrator Jeff Cadwell said the tax rate is declining as a result of market increases and levy increases not keeping pace with costs.
Contributed/Hubbard County Auditor's Office

Budget drivers, other factors

Cadwell said some of “drivers” of the 2023 budget are that the Hubbard County Jail is running near full capacity, “requiring additional staff and reducing our capacity for boarding revenues.”

As a result, there’s a $1.5 million increase in the budget.

Four new jailer positions, two or three social service workers and one position in the county attorney’s office also impacted next year’s finances.

The third driver was implementation of a new classification and compensation schedule to county employees to remain competitive.

Noting the large crowd, Cadwell pointed out there were significant changes in market value of residential property. “That happened statewide. That happened countrywide,” he said, particularly where there is seasonal and lake property.

“Our average increase in residential properties in Hubbard County was 33% this year, and that’s having a major impact on what tax statements look like and valuation statements look like,” Cadwell said.

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Even if the county passed a 0% levy increase, Cadwell said homeowners still would’ve seen a tax increase due to the rise in property values.

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