Douglas County sets preliminary levy at 5.7 percent

Talk about it

At last Tuesday’s board meeting, Douglas County commissioners set a preliminary tax levy of more than $24.6 million, which translates into a 5.73 percent increase over last year.

The commissioners also agreed to set aside $100,000 in the county budget for future capital projects and equipment.

Douglas County Auditor/Treasurer Char Rosenow and Assessor Keith Albertsen acknowledged the impact of the loss of the homestead market value credit and the implementation of a homestead value exclusion.

“What has happened is a very significant tax increase,” Albertsen said. “Before we even start to dig, we are standing in a hole.”

And Commissioner Paul Anderson said, “The small cities are going to get nailed.”

Rosenow said she hoped the final levy amount would be reduced, but, she asked, “Where do they get the money if something happens? They want to do so many things. Well, you can’t do them if you do not fund them.”

Rosenow explained the homestead credit loss and homestead value exclusion.

“The state isn’t funding that piece,” she said. “What happens is they are reducing the value by a certain percentage, so the value that the taxes get paid on are at a lesser value for those that receive homestead credit so their taxable rate ends up being lower.”

Simply stated, the homestead credit has been eliminated. However, Minnesota taxpayers may be eligible for a homestead market value exclusion that lowers the part of their property’s market value that can be taxed.

The tax exclusion will be implemented on a sliding scale for homes valued at less than $413,800. The greater the value of the home, the lower the total percentage allowed to be excluded.

In turn, this shift in the law will decrease the tax base available for local governments to levy and other properties may face higher taxes, such as businesses and vacation/summer homes.

According to rough estimates provided by Rosenow, using last year’s levy figures with the market value exclusion applied, the average estimated initial tax rate increase under the changed law in Douglas County would be 6.5 percent – that estimate would be in addition to the preliminary 5.73 percent levy increase if it were approved.

Rosenow said the effect on taxes depends on the parcel.

“It ranges anywhere from a 53 percent decrease to a 65 percent increase,” she said, speaking of just the papers she had in front of her at the time.

Rosenow said they expected to have more concrete numbers in October or November.

Could the county adjust its budget to prevent a tax rate increase?

“We would have had to decrease our levy by $1.1 million in order to cover this, because that’s what we are losing from the state – roughly,” Rosenow said. “I don’t know that the board is talking that at all because there would have to be some major service cuts. We just can’t spend down the fund balance any more because we’ve been hit too hard by the Legislature over the last few years.”

She said the county would have to slash the budget somewhere in order to find the $1.1 million. It could be found in not doing roadwork or services cuts.

Additional budget discussions will be held, Rosenow said.

“We didn’t want to box ourselves in because there are too many unknowns,” she said.

The commissioners unanimously approved the preliminary levy, which can be reduced, but not increased, as the budget process continues.

A public hearing on the final budget was set for December 14 at 6:05 p.m. at the Douglas County Courthouse.

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