'Modest' St. Louis County tax levy hike looks likely

St. Louis County commissioners have about three weeks to decide how much, if any, they want to raise their portion of your property taxes in 2012.

Commissioners, under state law, must set a preliminary levy by their Sept. 13 meeting in Duluth. And while the final budget and levy isn't set until December, that number can't go any higher than the number set in September.

Indications from both county administrators and commissioners point to a "modest"' increase for the county's share of property taxes paid in 2012.

St. Louis County alone saw more than $2 million in direct cuts from the state for 2012, which if replaced by higher property taxes would increase taxes nearly 2 percent. The state not only cut direct aid to the county, but also made major cuts to the Arrowhead Regional Corrections system, alcoholism programs, adult mental health programs and child and community service block grants.

The state also boosted the county's share of sex offender commitment program costs from 10 percent to 25 percent for new admissions.

Add nearly 3 percent inflation -- with increased costs for electricity, diesel fuel, steel snowplow blades, culverts and other necessities -- along with any new programs the county might want to start, and the county's share of the property tax would go up substantially.

"But that's not going to be our proposal to the commissioners. We aren't going to seek any kind of a major increase,'' said Kevin Gray, county administrator. "Our history is to come in at less than the rate of inflation (about 3 percent), and we're certainly going to be doing that again this year."

County Board Chairman Steve O'Neil of Duluth agreed.

"We are going to look closely at what programs the state has cut and where we need to fill in... especially public safety. And this is not a time, for example, in this ongoing recession and chronic high unemployment, to be cutting mental health services like the state has done,'' O'Neil said. "But we also have to be aware of putting too much pressure on taxpayers. So I think we'll see a modest increase, but nothing much more than the inflationary rate.''

Commissioner Chris Dahlberg of Duluth, among the more fiscally conservative members of the board, said he's not going into the final levy-setting process with any pre-determined number.

"On one hand I see we have some real needs we need to fill in where the state cut, and that we can't leave people on the edge in this worst economy in 70 years, and that the county needs to make investments,'' Dahlberg said. "But I'm also hearing from people who work and have small businesses who say they are on the edge, too, and that any more incremental tax increases could put them over. ... It's a very tough call.

Whatever increase the county decides on, if any, probably will be in addition to any levy increase spurred by the state eliminating the homestead tax credit and replacing it with a different system that reduces taxable market value for homesteads.

And there probably will be additional increases in school district and city levies as well -- all adding to the total bill for taxpayers.

Gray's staff has been working for months to find cuts wherever possible, often by leaving open positions unfilled as employees retire. The county has shed more than 20 percent of its work force over the past decade, mostly by attrition, and no layoffs are expected for 2012.

St. Louis County has a roughly $304 million budget in 2011 (down from $326 million in 2010), but much of that is state and federal "pass-through"' money that doesn't affect local taxes. Local property owners -- homes, farms, cabins and businesses -- pay for about $108 million of that total.

Keeping camp, bolstering gravel roads

Gray said the county is committed to continuing support for the county-owned Camp Esquagama near Gilbert, for which the county pays to maintain the grounds, as well as the county's mine inspection program, two areas rumored for cuts.

The county also will continue some sort of role with the University of Minnesota Extension Service. Both of the county's extension agents retire in 2011, and the county does not want to pay the university the full price for two full-time agents. However, county officials say the retiring agents may be asked to come back in a part-time role as independent contractors.

One area where the county may venture into new spending is a gravel roads improvement program. About 1,600 miles of the 3,000 miles of St. Louis County roads are gravel, and many are falling apart. Under one proposal favored by some commissioners from northern districts, the county would spend an extra $500,000 in 2012 bolstering gravel roadways. That would amount to about a 0.5 percent tax increase for all taxpayers.

The idea seems to have board support.

"It makes sense to maintain them now, or we'll be rebuilding them in the future,'' O'Neil said.

Debate likely over cuts to human services

The state also cut funding for social services that the county administers. The county doesn't legally have to make up the difference in each case, but either clients or care providers are going to take a hit if the county doesn't kick in more money, county officials said.

The state cut funding for adult mental health care, child support and chemical dependency programs by more than $1.5 million.

"Commissioners ultimately will make the decision how much backfilling they want to do to make up for the state cuts,'' Gray said.