BENSON -- A tentative three-year tax agreement reached with the Corrections Corporation of America will mean lost revenues for Swift County, especially in 2011.
Property taxes will likely increase to make up for a decrease in revenue that the Prairie Correctional Facility in Appleton had generated in the past, said Swift County Auditor Byron Giese.
The prison, which closed in February, had appealed its $42.9 million valuation last fall, triggering a series of negotiation sessions.
Following a closed meeting Tuesday, the Swift County Board of Commissioners approved a three-year deal that assumes the prison will remain empty in 2011 and hopeful that it will reopen in 2012, said Giese.
The first part of the agreement includes a reduction in the 2009 valuation from $42.9 million to $32 million for the 2010 payable taxes.
That translates into a loss of $50,000 in tax revenue to the county this year, which Giese said will have to come out of the county budget. "It's something we have to deal with. It's not insurmountable," he said.
Harder hit is the city of Appleton that will see $250,000 less in revenue. The Lac qui Parle Valley School District will have a decrease of $40,000 because of the lowered valuation of the prison, and the state will get $60,000 less Giese, said.
The 2010 valuation, for taxes payable in 2011, will be lowered to $17.5 million.
The financial impact on tax revenues for the local entities hadn't been calculated with that low valuation. "Everyone will have to live with it and move forward," Giese said.
He said property taxes may have to increase 3 to 4 percent on each parcel to make up for the lost prison revenue: "Local taxpayers will pay more."
In the final phase of the three-year plan, the 2011 valuation for taxes payable in 2012 would increase to $21.5 million.
"We're anticipating that, hopefully, it'll be open again," said Giese, explaining why the valuation is scheduled to increase at that time.
Corrections Corporation of America, which has other empty prisons in the system, has assured the county that reopening the Appleton prison is their number one priority.
"It's not good for any of us to have this thing closed," Giese said.
The board did express concern, however, that if the prison opens its doors again in a few months with the lower valuation that the county "could look like we have egg on our face," said Giese. "But it would be a good thing to have it back open."
The tax plan was approved on a 4-1 vote, with Chairman Richard Hanson casting the lone no vote.
Commissioners Gary Hendrickx, Joe Fox, Doug Anderson and Pete Peterson voted for the plan, which still must get final approval from Corrections Corporation of America and the courts.
Another concern with the closed prison is the effect it will have on the 2010 Census. Ten years ago the facility had 1,400 prisoners that counted toward the county's population.
The population of a community is a factor in obtaining such things as federal aid.
Giese said if the prison opens and the population increases in the future, the county could appeal the census count.
The one bright spot financially for the county is that a $200,000 annual tax abatement that was part of the prison's economic development incentive has expired after 10 years, said Giese.