St. Louis County Commissioners today are expected to set the maximum levy increase, as county officials work to handle increased debt service, a major loss of taconite tax revenue and increased labor costs.
The board, which will meet in Babbitt, appears poised to approve a maximum 2015 levy of just under 3 percent, said County Administrator Kevin Gray. The levy can be lowered when the final levy is set in December, but it can’t be increased from the number approved today.
“We will be under 3 (percent) and that will be enough. It’s a responsible budget,” Gray said after individual discussions in recent days with all seven county commissioners.
Commissioners interviewed said that despite major hits in county revenue sources and a big jump in debt service for two major projects, the county can get by with a 3 percent levy hike.
“I’m comfortable with three percent. I could even get to 3.5 percent now and then bring it down in December if we can,” said Commissioner Steve Raukar of Hibbing.
Minnesota mining companies pay taxes on taconite shipped instead of paying property taxes on mines. St. Louis County lost $1.7 million annually after the 2014 state Legislature changed how taconite taxes are allocated, with more money going to Iron Range school districts to pay off construction debt, and less to the county.
The county also is facing $2.5 million per year in increased mortgage payments for the $21 million total refurbishing of the downtown Duluth Government Services Center. The county also will absorb much of the debt service for the expansion at Northeast Regional Corrections Center for a new program to expand holding cells for prisoners that otherwise would have to go to more expensive county jail cells. In addition to the construction costs, running the expanded program will cost the county nearly $1 million annually in operations costs, but is expected to save money in the long run, Gray said.
The county also agreed to 1.5 percent pay increase for 2015 in its collective bargaining agreements with unions representing county workers.
Patrick Boyle, the commissioner who represents eastern Duluth, said an increase just under 3 percent manages to account for new costs the county must incur to keep up basic services.
“I think the (board) is comfortable with where we are at,” Boyle said. “Considering the hit we took on taconite taxes and having to give a little raise to our workers… I’m fine with anything under 3 percent.”
Of the roughly $320 million county budget, much of the money is so-called “pass-through” funds from the state and federal government. The rest, expected to be about $116.6 million in 2015, comes from property taxpayers. That will be up from $13.3 million this year.
A 3 percent levy increase doesn’t necessary mean taxes will go up by 3 percent. That increase will be partially absorbed by higher property values, new growth and other factors.
