A St. Louis County Board workshop Tuesday offered little hope of property tax abatement for residents and businesses struggling due to economic burdens of the COVID-19 pandemic. The possibility of penalty relief for late payments remained on the table.
Auditor Nancy Nilsen told commissioners there was no legal way to abate property taxes or slash the taxes by percentages — a consideration the board addressed last month by resolving administration look into the possibility.
“It is very well-defined in (state) statute,” Nilsen said. “All we can really do is waive the penalty.”
Nilsen is expected to recommend a resolution that will require property owners to fill out a form showing need for a penalty-free extension. Applicants may be required to provide documentation in the future to justify their declaration.
Bars, restaurants, gyms, theaters, hair and nail salons and other businesses where people congregate have been told to remain closed during the statewide emergency.
Relief from late penalties is being discussed and implemented in other Minnesota counties, Nilsen said during a researched presentation. Some counties are limiting penalties to 1%, so as to encourage taxpayers who can pay to avoid delaying. Other considerations include not penalizing anyone who pays first-half taxes later in the summer.
Given the multiple cascading effects being put upon county revenues during the pandemic, Nilsen was not in favor of solutions which allowed those who can afford to pay to avoid the May 15 deadline.
An application process to waive penalties “would show we understand that these are unprecedented times and we are here to work with our community,” Nilsen said.
The board will begin debating the measure at its April 28 committee-of-the-whole meeting, and a subsequent vote would come up May 5 — time enough for Nilsen to inform taxpayers and disseminate applications should the measure pass.
Early reaction during the workshop showed no clear path yet for penalty relief.
Commissioner Keith Nelson called relief efforts “premature” given property tax relief was being taken up at the state legislative level.
“We’re not going to know what the state is doing until the bitter political end,” said Nelson, who last month advocated for abatement for small businesses. “I don’t see why we would do anything at this point.”
The legislative session is scheduled to end May 18. Nelson held out hope that statute could still provide room for abatement to small businesses.
The discussion of property tax relief came during a high-level look at county finances and operations being impacted by COVID-19.
According to Nilsen, who laid out several scenarios, a 10% reduction in property taxes would mean $14.6 million in revenue losses based on the 2020 tax levy of $145.6 million. Her office is already forecasting $6.3 million in revenue losses through the end of the year due to expected reductions in things such as transportation sales tax, licensing fees, decreased investment revenue and Sheriff’s Office fees and permitting.
The county’s $51 million cash flow reserve would essentially be wiped out, Nilsen said, by a 30% loss of property tax revenue.
But even a 10%-15% reduction in property tax revenue was far-fetched, at least at this point.
“That’s a very aggressive negative assumption,” County Administrator Kevin Gray said. “I trust and hope it won’t be there.”
Ten percent of taxpayers have already made first-half payments, while escrow payments were set to deliver $34.9 million between both May and October deadlines.
County operating in crisis
Further reports to the board yielded a big picture of how the county is nearly fully operating while in crisis.
Open positions are, for the most part, being left unfilled. It's an austerity measure, but it's also become too difficult to on-board anyone right now, officials said.
In the jail, staff and inmate temperatures are taken daily in an attempt to keep out the virus.
Bids are set to go out to deliver a full slate of $50 million in road and bridge projects this summer.
As of Tuesday, more than half (903) of the county’s roughly 1,800 employees were working remotely, while 707 were either in the field or remaining in an office.
In Public Health and Human Services, there was growing concern about a decline in the number of children being screened for protection assessments. In the weeks leading up to COVID-19, up to 70 assessments were being done weekly. That number has dwindled to the thirties as children are encountered by fewer of the mandatory reporters found in schools and day care centers.
“It’s very concerning for us,” Public Health and Human Services Director Linnea Mirsch said.
County staff members are documenting time spent on COVID-19-related duties separately for state or federal emergency reimbursement later.
Shelters in Ely and Duluth have opened. The temporary housing is for the isolation and quarantine of people who are homeless, or being relocated from tight, congregated settings and have tested positive for COVID-19, or have been in close contact with a laboratory confirmed case of the disease, Westbrook explained.
As of Monday, one month since the first case in St. Louis County, there were 21 active virus cases in the county, 52 total (including those who have convalesced), and 10 deaths.
The county was revealed to have slight differences from other counties related to its cases — with a higher percentage of deaths related to infections, and more cases reported from congregated care settings.
“We’re operating right now and have been for the last month-and-a-half in a way that is unique and different,” Amy Westbrook, public health division director, said. “We’re trying to address a pandemic in our local communities as well as operate in our other programmatic responsibilities. It’s a challenging situation and not really a sustainable model.”