Lake County property taxpayers will likely see a 6% increase in 2020.
Commissioners presented the increase during the truth in taxation hearing Tuesday, Dec. 3, in Two Harbors.
The county is proposing a net property tax levy of $11.1 million, an approximately 6% increase from 2019. County Administrator Matt Huddleston presented the budget and highlighted some of the reasons for the increase — the biggest being the U.S. Forest Service's reappraisal of the Boundary Waters Canoe Area Wilderness.
Boundary Waters impact on levy
Every 10 years, the U.S. Forest Service appraises the BWCAW and pays the county one-quarter of one percent of the value and sets the Thye-Blatnik Act-authorized payments in in lieu of taxes (PILT) for the next decade.
In June, the Forest Service presented the county with the appraisal, which included a 63% reduction in value for the Boundary Waters as a whole, equating to a 53% reduction in PILT revenue for Lake County.
Previously, the county received approximately 2.6 million annually. With the 53% reduction, the county is set to receive $1.3 million annually. The county would have to raise the levy by 12.6% to make up the lost revenue.
"That revenue we relied upon is potentially going to be lost and cut," Huddleston said. "So we’re wrestling with that and working with Forest Service to get our point across. We don’t think the Boundary Waters dropped that much. The challenging part for us with the budgeting process is that we don’t have that final answer."
Huddelston said he hopes the county will hear from the Department of Agriculture regarding an appeal the county, along with St. Louis and Cook counties, made to reconsider the appraisal. But it is unsure if they county will hear before the county board's final meeting of the year at 2 p.m. Dec. 17, when the budget and levy must be adopted.
Other issues included in budget
A few other issues Huddleston cited as impacting the budget include labor negotiations. All of the county's labor contracts expire at the end of 2019. Negotiations are ongoing and are expected to be wrapped up soon.
"Any new wages or fringe are not reflected in our current budget. It’s something we're taking into consideration, but it’s not reflected in those numbers," Huddleston said.
The county also saw an increase in health insurance costs for its employees. Health and human services take up 26% of the budget's expenditures. So when there's a health insurance increase of approximately $112,000 — or 7.5% — it has to be equated for in the budget.
Other budget highlights included the county providing $500,000 to help keep the Lake County Ambulance Service afloat in 2020 and an increase of $83,000 in the county’s support of Arrowhead Regional Corrections. Both Silver Bay and Two Harbors public libraries will see a join increase of $47,000 from the county, which hasn't been done in approximately 10 years.
The county also had a bond expire this year, which led to a levy reduction of $174,000. Yet, two bonds were issued in 2019 to complete the Lake County Highway Facility building, in which the meeting was held, so debt service will increase moderately.
As for capital equipment purchases, the county plans to purchase two snowplows to replace old equipment and maintain the fleet.