Legislature draws ire of St. Louis County commissioners
Minnesota's failure to pass a tax bill has left the St. Louis County Board weighing budget cuts as it tries to hold a line on tax increases.
DULUTH — St. Louis County commissioners heralded budget cuts during meetings last month while slamming the state Legislature for failing to pass millions of dollars in tax cuts.
“I’m not going to let them off the hook,” Commissioner Keith Nelson, of Virginia, said June 28 in Brookston. “They need to come back and finish their work, or they shouldn’t get paid.”
The St. Louis County Board enters July poised for months of budgeting work set to be approved in the fall.
Nelson, chair of the board’s budgeting committee, said “reality” for the county is that it will be left $7 million-$9 million short.
Commissioners have expressed measured hope for a special session of the Legislature. But the board is also preparing as if it will need to make difficult decisions. Commissioner Patrick Boyle, representing eastern Duluth, called the situation “bleak” during a meeting June 14 in Duluth.
“If we do not have state cooperation on this we’re looking at a significant levy,” said Commissioner Patrick Boyle, representing eastern Duluth. “We still have to pay employee health care; we still have to pay their salaries; we have to offer mandated services to 200,000 individuals in our county. We have to do it.”
Without help from the state, Boyle insisted the county’s “narrative” needed to throw legislators under the bus.
“We’re not falling on the sword by ourselves,” Boyle said.
The Legislature adjourned in May, failing to close on a tax bill that would have used $4 billion on tax cuts, much of it coming from the state’s historic $9.3 billion surplus. The Legislature also failed to pass a bonding bill that featured projects for St. Louis County, including millions of dollars for Virginia landfill improvements and necessary Depot upgrades.
“Their not finishing their work has put us in a bind,” Matt Massman, executive director of the Minnesota Inter-County Association, told the board in June.
The county had expected to receive a $1.6 million annual bump in county program aid, as well as increases in money paid for the non-taxable federal lands within county boundaries. St. Louis County has more of those lands than any other county, and has long fought for an increase.
Neither of those increases will happen without the Legislature returning to work before it’s scheduled to reconvene Jan. 3 — well after the 2023 budget and levy are approved.
“The tax bill will affect every single citizen in St. Louis County in a positive way,” Board Chair Paul McDonald, of Ely, said in June.
With property valuations and, subsequently, property taxes rising across the state, Nelson said the fix isn’t to continually raise property taxes. Nelson said he won’t vote for a levy that produces more than a 2% increase, and that it’s on the state, flush with a surplus, to fix things.
“We cannot pass another huge increase onto property owners who are paying $5 and $6 per gallon for gas and watching groceries go up every other day,” Nelson said. “We’re all feeling it.”
During a tense interaction last week, Nelson recommended a hiring freeze, and that every department head “sharpen their pencils and figure out how we are going to keep this in line for our taxpayers.”
Commissioner Ashley Grimm, representing western Duluth, bristled at the thought of a hiring freeze, saying it would impact services to families. She made the point about how investments in social workers have positively impacted a reduction in costly out-of-home placements for children.
“I’m not interested in short-changing our staff,” Grimm said. “I want to protect our staff and I want to protect our services. I want to hold firm and be clear I don’t want those (cuts) to come from staff.”
Grimm chided the board for making investments in vehicles and equipment, but not creating space on the board to further discuss issues such as child care.
Nelson seemed to take her point. On the topic of budget cuts, he suggested deferring certain costs and projects by a year or two instead of looking at personnel.
“We’ve made a lot of improvements; we’ve made a lot of investments and those investments have paid off,” Nelson said, agreeing with Grimm that programmatic investments can yield big financial returns, such as having fewer children in out-of-home placements.
One upside for the county: Substantial real estate market growth is projected with new growth leading the way, meaning the county figures to be able to capture new money onto its tax rolls to help offset the amount of levy increase. Last year, the county delivered a levy 5.94% higher than 2021 to help fund its $440 million budget. Growth in the property tax base meant property owners felt an average increase of 1.69%.
Boyle held out hope for a legislative special session in August, following the primary election. Until then, the board will prepare its 2023 budget along two tracks — one featuring the added state money and one without.
“It makes for double the work, but we’re in uncharted waters,” Boyle said.
Commissioner Frank Jewell, representing central Duluth, concurred.
““For counties,” Jewell said. “It’s enormously impactful to not pass a tax bill.”