Commissioners across much of region say tax increases are a must in 2008

MINNEAPOLIS -- Lenore Johnson is in an awkward situation.

The Lake County commissioner likely will vote with other commissioners to increase the county's property tax levy up to 7 percent in 2008. While Johnson said her own property taxes might actually decrease next year, the levy hike will result in higher taxes for other property owners in the northern Minnesota county.

As in nearly all counties, Johnson said that her county board is seeking more revenue for 2008.

The cost of government continues to increase, she said, but the state is not paying enough, forcing counties to turn to the only major source of revenue they control: property tax.

"You still have the (state) mandates, you still have the standards, but they've cut back on the money to do it," said Johnson, who was in Minneapolis this week with county commissioners from across the state for their annual meeting.

Commissioners claim their hands are tied. They say they have trimmed spending on non-essential services. At the same time, county employee health insurance costs are rising, the state does not pay for all the services it requires counties to administer and some counties face major construction projects that cannot be delayed.

All but one of Minnesota's 87 counties plan to increase property tax levies next year. Whether property owners see an increase on the county portion of their tax statements depends on several factors, including the rate of growth in the county and home values.

One-fourth of all counties have proposed levy increases of more than 9 percent, said Joe Mathews, an Association of Minnesota Counties policy analyst. Generally, next year's county property tax levy increases are lower than 2007 rate hikes.

Much of counties' frustration over property tax issues is aimed at Gov. Tim Pawlenty, whom they blame for shifting costs from the state level to local governments.

Republican Pawlenty said this week the state in recent years has "robustly funded" health and social service programs carried out at the county level.

The governor reiterated his longstanding support for a new state law limiting property tax increases.

"That's the only true way to control property taxes," Pawlenty said, adding a property tax cap has worked in other states.

"The state loves to tell us not to raise revenues, but they never want to tell us that we don't have to spend money," Mathews said.

A key lawmaker said the Legislature will work on property tax relief proposals in 2008, but a projected state budget deficit could be a stumbling block to major change.

Rep. Paul Marquart, DFL-Dilworth, said the burden on low- and middle-income Minnesotans has increased as wealthy residents pay a smaller share of their income for property taxes. Also, he said, residential property tax makes up a disproportionate share of property tax collections, and Pawlenty's across-the-board opposition to tax increases has made the situation worse.

County officials are not holding their breath for changes in St. Paul that would lessen their dependence on property tax revenue.

"Everybody talks a good game, but nothing changes," Wabasha County Commissioner Don Springer said of the governor and state lawmakers.

Springer may end up voting on the largest county levy increase for 2008. Wabasha County has proposed a 25 percent hike in its levy, about half of which would help pay for construction of a new jail and court building.

In western Minnesota's Lac qui Parle County, commissioners could soon decide to increase next year's property tax levy by 7 percent. That boost is needed to pay for union wage increases, road and bridge projects and human service programs, Commissioner Al Hoffman said.

Lack of agreement among Pawlenty and lawmakers on a transportation spending bill also hurts counties, which in turn look to property taxes as a larger source of revenue, Marquart said.

Commissioner Amy Wilde said Meeker County is looking at a 9.8 percent levy increase next year, but the impact on property owners should be negligible because the county is growing.

Still, Wilde was smarting over what she said was $70,000 of state aid Meeker County missed out on when Pawlenty vetoed a tax bill the DFL-controlled Legislature sent him earlier this year. The county must make up for that lost revenue, she said.

Association of Minnesota Counties Executive Director Jim Mulder said a discussion should take place at the Legislature about which programs counties should fund with property tax dollars and which programs the state ought to cover.

"This isn't all about we should have more money," Mulder said.