Wright County Board Minutes

BOARD OF WRIGHT COUNTY COMMISSIONERS
DECEMBER 6, 2018
DATE APPROVED: DECEMBER 18, 2018
The Wright County Board met in regular session at 6:00 P.M. with Daleiden, Borrell, Husom, Potter, and Vetsch present.
The purpose of the meeting was to discuss the proposed 2019 Draft Budget and Draft Certified Levy.
Lee Kelly, County Coordinator, said the PowerPoint presentation for this meeting was tailored to answer questions about the property tax statements that were recently mailed to citizens. He explained the budget process and time line as shown on Page 2 of the presentation. Kelly said this County Board and Public Comment meeting (formerly known as the Truth in Taxation Meeting) is required annually per Minnesota State Statute and must be held at 6:00 P.M. or later. This meeting is an opportunity for the public to receive input and ask questions. The final budget must be adopted prior to 12-30-18 and submitted to the Minnesota Department of Revenue.
Kelly said Assessor’s staff were available to answer questions about valuation or classification questions regarding specific properties. This meeting is focused on the 2019 Draft Budget and Certified Levy.
Tony Rasmuson, County Assessor, presented a document titled, “Assessment Year 2018 – Payable Year 2019,” to show how the assessment process works. His staff reviewed annual sales ratios from 10-1-16 to 9-30-17 and developed tables from them. When a property sells for more than assessed value, the values will be raised. When a property sells for below assessed value, the values will be decreased. Rasmuson said the County must fall within a range of 90 to 105 percent according to standards the State considers acceptable. Property valuation and classification may be appealed in the spring of the year. The Notifications of Value and Classification were sent in late March, and appeal hearings were held April through June. Values are certified after the County Board of Equalization meets. The only way a value can be changed is in Minnesota Tax Court. The public has until 4-30-19 to appeal at the Tax Court level. At this point, values are certified, tax capacities are calculated, and the taxes are apportioned to all property owners for the levies that will be created for 2019.
The only changes that could be made now would be those caused by a clerical error.
Rasmuson said the term property value refers to its tax capacity. There are 61,000 taxable parcels in the County. The Assessor’s job is to create the tax capacity pie comprised of all those properties, and then evaluate their market value and classify them according to use. The Assessor’s Office sets the values before the Levy is set, per State requirements. The County Board generates the Levy at the County level.
Bob Hiivala, Auditor/Treasurer, returned to the PowerPoint presentation and the “Property Taxes 101” page. The Assessor values and classifies properties as commercial, agricultural, residential, or seasonal recreation. The Auditor/Treasurer’s Office determines the tax capacity. The State has a classification rate. The Auditor/Treasurer takes that rate and multiplies it by the value of a property as calculated by the Assessor. This determines the individual tax capacity. All the tax capacities in the County are then added together to get the total tax capacity. The Levy amount is divided by the total tax capacity to get the tax rate. Everyone pays the same tax rate. The tax amount due is based on the value of each individual property.
Hiivala turned to the next page, “Taxes 101 – More Variables.” Changes in market value are the factor that most often affect property taxes. Other factors include city or township budget and levy changes, special assessments, referenda, federal or state mandates, changes in Federal or State aid, and legislative changes to the tax base. Hiivala explained the following two pages showing a sample property tax statement. The County tax rate increased for 2019 because the tax capacity went up by 7.17 percent.
Referring to the “2019 Budget Forecast” page, Hiivala said the Operating Budget for 2019 was set at $147,090,953. The preliminary 2019 Levy was $73,524,014, or a 17.30 percent increase over last year’s Levy. The tax capacity increase is estimated at 7.17 percent. The Levy percentage increase is not the same as the property tax percentage increase.
Hiivala discussed the page titled “2019 Budget Spending,” and then went to “How the budget is spent.” He said 49 percent of the County budget goes toward personnel services.
Regarding “2019 Budget Revenues,” Hiivala said an average of 48 to 52 percent of revenues for the Operating Budget is generated by property taxes. The 2018 budget was $128 million.
Commissioner Darek Vetsch discussed the “Major Budget Impacts” page. The dollar bill represents the entire 17.3 percent Levy and divides it into categories, such as Staff Requests, New Debt Service, and others. Vetsch said 90 percent of County functions are mandated services by the State and Federal governments. If the County doesn’t provide the mandated services, such as those performed by the Sheriff’s Office or Health & Human Services, the government will step in, provide the services, and fine the County.
Vetsch explained that the “Use of Fund Balance” column refers to using fund reserves and the need to replenish them. The County is required to have six months of reserves in operating cash. “Preapproved Wages/Benefits” refers to pre-negotiated union contracts, cost of living adjustments, or other committed funds. An example of “Preapproved Debt Service” would be the new Justice Center. In 2002 the Tenth Judicial Court told the County they needed more space. In 2012, they sent a letter to the County that said a new building must be built, or they will relocate to another county and bill Wright County for the time it takes staff to get there. Space for the Court is essentially mandated by the State. “Staff Requests” reflects 13.5 new positions requested by staff and vetted by the County Board in August of 2018. Commissioner Mark Daleiden said 27 requests were made, but 13.5 were approved. Departments do not receive everything they request. Mandates are addressed before decisions are made regarding which Departments can hire staff. Vetsch said most of the new positions are in law enforcement. Two are in corrections. Currently they are working mandatory overtime. The Information Technology Department also needs staff.
Vetsch continued with “New Debt Service.” The Courts side of the Government Center building will be vacated in January 2020 with Courts and related Departments on the fourth floor moving to a new facility. A decision must be made regarding whether the County continues to operate out of the Government Center building, remodel it, or build a new one. Vetsch said the restrooms are not accessible according to the Americans with Disabilities Act (ADA). The boiler is at the end of life. To leave this building as is would still cost $6 million for various repairs. The County Board allocated money under New Debt Service because these items must be addressed, regardless of whether repairs are made, the building is remodeled, or a new one is built.
Christine Keeler of Maple Lake: Keeler said she does not like how the County is spending her money. She lives on a major road, and the roundabout near their home is noisy. She feels she and her husband Jeffrey are penalized because they are disabled. She asked the County Board to do the right thing.
Vetsch continued with the “Classification & Compensation Insurance” column. He said the County is not paying competitive wages. At one point there were 19 open positions. The Classification and Compensation study is due by mid-2019 and will provide more information regarding whether the County is paying an adequate amount. The $2.5 million in this column is an estimate to correct the pay scale if necessary and attract good candidates and retain employees.
Vetsch said the “Other” column reflects cost of living adjustments (COLAs), inflationary increases, and smaller costs.
In addition to the need to attract and retain employees, Vetsch said factors behind the 2019 budget include funding capital improvement projects without using reserves and addressing prior delays on County building needs.
An audience member asked why the new Justice Center is so big. Commissioner Michael Potter said the building is built for future needs to avoid the cost of future expansion. By 2040, the County population is projected to be 200,000. Potter said the County does not pass laws, but only implements laws that are passed at the State and Federal level.
Vetch addressed the “Increasing Demand for Services” page. Child foster care and mental health placements in the County comprise a multi-million-dollar line item in the budget. Less than 10 percent is funded by the State and Federal government. The rest of the cost is borne by the County. When a child is taken out of the home or a person with mental health disabilities needs placement, it costs between $1,000 and $1,400 per day per person. This is a mandated service. The cost of placements increased by $550,000 from last year to this year.
An audience member said he lives on a fixed income. He asked where he was supposed to find the money to pay another 20 percent in taxes. Another person asked which expenses are fixed and which are flexible in the 2019 budget. Vetsch said there is no percentage. For example, $2 million of the Classification and Compensation Study (and estimated increases) is not mandated. A portion of the $550,000 for Health & Human Services is tied to health insurance and union contracts. $1.46 million for new staff could be removed but may be a temporary fix if the need for them persists.
Moving to the “County Technology” page, Vetsch said the goal is to build on technology so less staff is needed in the future. He added that the County is considering a potential partnership with the FBI to build a Law Enforcement Training Center as listed on the “Currently Working On” page.
“Current Challenges” includes the possibility of early closure or loss of re-licensure of the Monticello Nuclear Power Plant in about 2030. The Minnesota Department of Revenue agreed with Xcel Energy to decrease the property value of the plant by $69 million or 7.69 percent. The Department of Revenue and the Minnesota Public Utilities Commission set the value of the plant. This results in a huge tax shift from the nuclear plant to citizens, and had a significant impact on property taxes, especially for Monticello residents. If the plant needs a lot of repair, there is a risk Xcel would go for early closure. Vetsch said the Board is trying to work with Xcel Energy, but there are no guarantees that $7 million to $8 million in tax revenue from the nuclear plant will be there in the future. Vetsch said the Board is trying to prepare for the worst but hopes for the best.
Regarding “County Growth,” Vetsch said the County is in the top five counties in the State for growth. It is hard to be among the lowest in per capita spending and one of the fastest-growing counties.
Vetsch moved to “Past Capacity vs. Tax Rate, 2012-2019.” This page shows the County tax capacity and how it has grown since 2012. The “Forecasted 5-Year Outlook” page shows the worst-case scenario with blue lines, and best-case scenarios with red lines. The County has averaged more than a two percent growth in tax capacity since 2008, even with a decrease in tax capacity from 2008 to 2011 due to the downturn in the housing market. Not counting a major recession, Vetsch said the County should be able to maintain a tax capacity of two percent. Vetsch said the goal is to set the County up for sustainability and predictability for taxpayers. The County has experienced an average of more than seven percent growth in tax capacity in the last three years. The chart projects six percent to reflect the shrinking valuation of the nuclear plant. The tax rate portion of the chart represents where the tax rate is projected to fall for the next five years. The best-case scenario indicates a tax rate of 41 to 42. The worst case would be 47 to 50 tax rates. Commissioner Christine Husom said the tax rate was higher in 2013 than it will be in 2019. If a home was valued at $250,000 in both 2013 and 2019, the property taxes will be lower. The goal is to work toward steadiness.
The meeting recessed at 7:40 and resumed at 7:50
Public comment began with Dan Gruhlke of Monticello. Gruhlke said the Levy increases his taxes by 25 percent. He expressed concerns that people will leave the County. He urged the County Board to adjust the budget.
Jan McLean of Albertville: McLean lives in a 55+ townhome. Her taxes have increased $650 over three years. She is not sure how long she can afford it. She said most of her neighbors are elderly and on very limited incomes. She asked the County Board to plead with the State for help for senior citizens.
Dave Zumbusch of Chatham Township: Zumbusch said the tax increase percentage is large. He said there’s a disconnect when his house value goes up five percent and his taxes go by 17 percent. Inflation is 3 percent. Average wage increases are 3 to 5 percent. The County is building a nice courthouse, and the square footage costs are high. He suggested the County raise taxes by a “comfortable” amount; but 17 percent is too high. Zumbusch suggested the Board reduce the budget by $9 million, which would drop the Levy by 10 percent.
Mark Anderson of Monticello: Anderson asked what portion of the Spending pie has increased the most for the 2019 budget, not including State mandates. Vetsch said the General Government portion increased 1.5 to 2 percent from 2018 to 2019 due to entering a placeholder for the Classification and Compensation study. Most increases were less than a one percent differential. The biggest piece of the pie that changed from 2018 to 2019 was Debt Service due to upcoming expenses for the current Government Center (whether it is repaired, remodeled, or rebuilt), plus debt service for the Justice Center. Anderson asked whether there needs to be a roundabout at every intersection with landscaping. He added that there are a multitude of projects that people question.
Daleiden said the County budget, monthly expenditures, and other information are posted on the Auditor / Treasurer’s page on the County website.
Mark Wollschlager of French Lake/South Haven: Wollschlager asked whether the 17 percent increase is due primarily to the devaluation of the Monticello Nuclear Plant and the new Justice Center. Potter said out of home placements, social services, and mental health issues also contributed. He said mental health costs can’t be passed on to cities and townships.
Layne Roschen of St. Michael: Roschen commended the County Board on being fiscal conservatives and doing a good job. He encouraged citizens to meet with legislators. He estimated that the 2010 budget was about $90 million. The 2019 budget at $147 million is a 63 percent increase. He asked the Board to consider whether the Departments are sized appropriately, and whether the County buys new vehicles or used. Daleiden said the County buys a snowplow every 12 years. The other vehicles are at least 10 years old, except for squad cars. Roschen sees interest rates going up in the future. Growth may slow. Roschen advised the County Board to move forward with extreme caution.
Carol Stein of Rockford Township: Stein asked for clarification on mandated services. Potter said the Courts’ need for a new Justice Center, as well as the standards for security, technology, and space are all set by the State and Federal governments. The goal is to make the new Justice Center large enough to handle growth over the next twenty years.
Husom said there are many Health & Human Services employees currently housed in a different building that would move to the Government Center once Courts and related Departments vacate. Potter said if they did so, this building would be at 100 percent capacity immediately. That leaves no room for growth and would cost $22 million to renovate. Should the County then spend $70 million for a new building in another ten years?
Dwight Hammer of Albion Township: Hammer asked whether comparisons were made with other counties regarding what they spent for similar courthouses. He said Swift County built one for $20 million at $100 per square foot. Potter challenged that and said that is not close to the construction cost of that type of building. Hammer said they could build a metal post building instead of a fancier one. He has lived in Wright County for 20 years, and his tax increases have averaged have 4 to 7 percent.
John Slusarczyck of Otsego: Slusarczyck said his taxes have increased 55 percent since 2010. He feels that he could live in a Metro county like Washington, Anoka, or Dakota and pay less in taxes. Anoka County proposed a 4.94 percent levy increase, Washington 5.5 percent, Sherburne is at 4.75 percent, Hennepin 5.5 percent, and yet Wright County proposed 17.3 percent. Slusarczyck said the County is four times higher than the other counties that have the same State and Federal mandates.
There was consensus that this discussion will be continued at the 12-11-18 County Board meeting.
The meeting adjourned at 9:12 PM.
Published in the Herald Journal Dec. 28, 2018.