Truth in Taxation: Carver County approves budget

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For twelfth consecutive year, owners of an average-value home will pay the same taxes or less

By Melissa Priebe
[email protected]

In December, the Carver County Board adopted a budget and levy for 2017, making no change in county tax impact to owners of an average-value home within county lines.
The 2017 budget totals $123,300,732, which is an increase of 25.01 percent from the 2016 budget of $98,635,721. According to county staff, the increase of $24,665,011 is primarily driven by road and bridge capital projects planned for 2017.
The 2017 levy increased to $51,649,500, an increase of $1,406,800 or 2.80 percent from the 2016 property tax levy, which was set at $50,242,700. The county board made recommendations to limit the levy increase to capturing new tax base, making no impact on an existing average-value home.
After working on the 2017 budget and levy since the spring of 2016, the Carver County Board approved the budget during a special session on Tuesday, Dec. 20. They also approved the 2018 Long-Term Financial Plan for Carver County, putting a roadmap in place for the future of local county government.
“You gave guidance, way back in the spring, to not have an impact – no change – on that average-value home in Carver County, which is just under $300,000 in 2017,” said County Administrator David Hemze, during the meeting. “That was accomplished in the recommendation.”
Hemze introduced a presentation for the budget recommendation, pointing out that there was no change in this tax impact, although there was a .6 percent change for agriculture and a change for commercial of minus 12 percent to plus 8 percent, depending on each city.
The county budget was formulated by staff under the recommendations of the county commissioners, using a number of strategies to produce a balanced budget and zero impact on the average-value home, despite an increase in demand for county services. Those strategies included capturing the tax base from new construction, investing in salary and benefits for county staff to remain competitive, analyzing trends to identify changes in revenue and spending, investing in staffing changes to respond to “the pent-up and growing demand for services,” funding new capital projects without increasing the property tax levy, and following the five-year schedule to replace facilities, vehicles and equipment.
Because there were some negative trends in the budget, the county moved around debt service payments and other components to achieve the desired result.
“To make sure we filled that gap, we did come up with a number of levy adjustments, ranging from taking some debt service off the books to vacancy savings,” said Hemze.
Vacancy savings are savings the county incurred from staff members leaving their jobs, whether it was due to retirements where a replacement was not hired right away or due to people vacating their jobs during the year for other reasons. Carver County also worked to add positions in several areas, with notable changes in Public Services like library work, Public Works, and Health and Human Services.
Property and Financial Services Director Dave Fischmond presented the recommended budget in detail during the meeting, with more detail offered in the county board packet, which is available online on the Carver County website.
Because of funding from the state government and other sources, he said some of the changes to the budget were none-levy funded, meaning the funding comes to Carver County from other agencies.
“We’re actually recommending just under 14.5 Full Time Equivalents,” said Fischmond. “Most of those are going to be non-levy funded, so potentially from other revenue sources, then 2.25 of actual levy-funded FTEs.”
The county was also able to offer a salary increase to government staff.
Hemze said the budget also goes toward the funding of 274 miles of county roads, 69 bridges, and 928 acres of public areas in Carver County, as well as public safety resources, libraries, personal records, disease prevention and public health services, social services and environmental services like recycling and water management. In fact, some of the addition of FTE, or Full Time Equivalent, positions was recommended in the area of libraries.
“We have a high level of library services,” said Hemze.
Later in the presentation, he also noted that a new library facility is planned for Chaska in 2018. The costs of building and operating the library are divided between the city and the county, so long-term planning will account for that change.
“In terms of a net trend summary, which they mentioned, the good news is we had some federal funding county-wide,” said Fischmond, though he said there were some new costs to the county in this budget. “We also set aside money for road preservation.”
He said Carver County will need to spend some money on replacing vehicles and equipment in the coming year.
“We have a five-year cycle to replace everything we own, related to anything with wheels on it, related to trucks and squad cars, as well as some of our IT stuff,” said Fischmond. He said the county should be able to keep up with that schedule and stay on budget. “We have a really good, strong schedule, but it means additional money in terms of what we need to do in the next five years.”
In all, the trend and need for increased spending came to $640,000, adding a burden to the 2017 budget. However, Carver County also showed $625,000 worth of vacancy savings over the last year. Fischmond pointed out that the county was very conservative when it came to hiring and salaries for a number of years, but as the economy gradually gains ground, the savings from that type of activity are expected to narrow.
The county also managed to lower the interest rate on some of its debt service, saving additional costs.
“That was close to almost $700,000 in debt service savings for 2017,” said Fischmond.
All told, the Carver County Board was presented with a balanced budget. With the 2017 budget and levy, this will mark the twelfth consecutive year that Carver County has kept the property tax levy the same or lowered it for owners of an average-value home. However, as the economy gradually gains strength and funding like County Program Aid from the state of Minnesota returns, so too has the value of homes in Carver County risen.
According to Fischmond, the average-value home in Carver County dropped from $324,000 in 2008, to $227,600 in 2013, in part due to the recession. Now, home values are rising again. That figure rose to $292,000 for the 2017 budget year.
Not only did Carver County achieve a zero impact budget and levy for the average-value home, but it also maintained its AAA rating for excellent finances.
“Our bond rating that the county has improved from AA3 back in 2008, to AAA,” said Fischmond. “We were upgraded to triple A in 2010, and we’ve maintained that through 2016.”
Included in the budget for 2017 were the recommended Capital Improvement Plans (CIP), ranging from roads and bridges to an update for Lake Waconia Regional Park, that would be funded in part by Carver County and in part by state bonds, should the state of Minnesota decide to issue them. The budget allotted a non-levy funded amount of $661,534 for the parks and trails CIP, a non-levy funded amount of $79,904 for building projects, and a sum of $30,627,928 for roads and bridges, which would include $1,890,000 to be funded by the levy. The plan also included $2,019,684 for equipment and vehicle maintenance, of which $1,432,400 is levy-funded.
Looking toward the long-term, the Carver County Board also approved a long-term financial plan which they said could be adjusted as factors change.
Down the road, Carver County may consider a wheelage tax or a 1/2 cent sales tax to pay for roads and bridges. They also deferred to the Master Space Plan.
“We do have a number of unfunded, high-priority projects in our plan, the road and bridge plan,” said Fischmond. “There’s a Master Space Plan study that’s ongoing, in terms of how the county grows.”
He said that would account for a new library facility in Chaska, which could potentially be built in 2019.
“The cities actually build the libraries. They do the bricks and mortar,” said Fischmond. “We just supply the books, and the shelves, and the bodies to operate it, so we do need to start planning for that.”
In terms of the operating budget, the largest expense was people.
“The future staffing requests – that’s our biggest push,” said Fischmond. “As the county grows, there’s an increase in demand to provide services, as well as our services tend to keep getting more complicated.”
For future years, he said Carver County will need to hire more staff in order to keep up with population growth, and some of those staff, especially in Health and Human Services, will be required by the state government.
“We’re trying to encourage innovation as much as we can, cooperating with our cities as much as possible,” said Fischmond, adding that health insurance costs are also a factor for the county. “We’re going to continue that positive momentum.”
“The total combined levy would be $52,293,433,” said Commissioner James Ische, “and our total budget for 2017 would be $123,987,165.”
The commissioners thanked the county staff for their work on the budget, which took many months to finalize. They also acknowledged the financial challenges faces counties today.
“Our job is to address the needs of the citizens and taxpayers of Carver County,” said Commissioner Randy Maluchnik. “Those may differ from Scott County and they may differ from Dakota County, but I think we’ve done that.”
Commissioner Tom Workman said he would like to see Carver County work even harder on the property tax levy in the coming year.
“I’m not exactly happy with the 2.80, not as I would be with a .80 or something like that,” said Workman. He said he was proud that Carver County was able to remain competitive with other counties, but he would rather see a smaller increase in the levy for the new tax base. “I understand why we’re going there. I’m going to support Mr. Hemze’s budget and make it ours today, but promise to work even harder for next year.”
The Carver County Board passed the 2017 budget and levy with a unanimous vote.

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