Olmsted County commissioners capped the county’s potential 2022 property tax collection at $112.8 million, a nearly $5.3 million increase compared to this year.
The proposed 4.9 percent increase comes after the county held the property tax levy steady at $107.5 million last year.
“This approach creates pressure for us in 2022,” Wilfredo Roman-Catala, Olmsted County's chief financial officer, told commissioners Tuesday.
RELATED: Olmsted County to use $16.1 million in COVID relief for affordable housing, homeless
He said some costs increased during the year, and moving forward without a property tax increase or additional revenue source would require dipping into reserves.
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He added that the increased levy request primarily covers a 2.5 percent cost-of-living increase outlined in eight of the county’s 10 union contracts and increasing health care costs.
Roman-Catala pointed out the county has held a flat ratio between staff numbers and the population for five years, even as the number of county residents continues to increase.
County Administrator Heidi Welsch said the limited hiring keeps the county operation lean but effective.
“Our Olmsted County team provides critical services across the entire community – from law enforcement and public safety to maintaining county roads and parks to providing care and services to vulnerable residents,” she said. “In everything we do, we are committed to high-quality service with care to the community and using public resources wisely.”
County Commissioner Matt Flynn, who joined Commissioner Ken Brown in voting against the preliminary levy increase, questioned the proposed amount, citing concerns about raising taxes as pandemic pressures continue for residents.
He said the county should consider options to reduce the reliance on property taxes.
“We have the most federal money we’ve ever had in our lives,” he said, pointing to $31 million the county is receiving through the American Rescue Plan Act.
County commissioners have already earmarked approximately $16 million for affordable housing infrastructure and other county programs.
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Commissioner Sheila Kiscaden said using the funds to buy down next year’s tax levy would cause larger increases in the future, rather than investing in long-term needs.
She said she supported the preliminary tax proposal since a portion of the added expense will be covered by new development.
“I still think it's a prudent thing to do,” she said.
What happened: Olmsted County commissioners approved a 4.9 percent preliminary property tax levy increase for 2022.
Why does this matter: The county must set a 2022 cap for the overall property tax collected by the end of September. The amount approved can be reduced but cannot be increased.
What's next: The commissioners and county staff will continue working on the 2022 budget, which is expected to be approved by the end of the year. A public hearing on the final budget is set for Dec. 2.
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In addition to the overall tax levy, the county commissioners unanimously approved the county’s Housing and Redevelopment Authority tax levy, which was held at the maximum rate allowed by the state.
With anticipated added market values throughout the county, Roman-Catala said the levy is expected to collect $3.9 million next year for housing-related programs. It’s a 4.15 percent increase from the amount the county collected this year.
The county, along with other taxing entities, must set its tax levy cap by the end of the month. The amount is used to calculate individual tax estimates in Truth-in-Taxation notices that will be sent to property owners in November.
The county’s Truth-in-Taxation hearing is set for Dec. 2, at which point commissioners will be able to lower the 2022 tax levy as they prepare to approve the final 2022 county budget, but they will not be allowed to increase the amount collected.
Tax levies through the years
As Olmsted County’s tax capacity has increased, so have the amounts collected through the property tax levy. The tax levy is the overall amount the city collects through all property taxes.
Here’s a look at what’s been collected in recent years:
2022 -- $112.8 million (proposed)
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2021 -- $107.5 million
2020 -- $107.5 million
2019 -- $103.2 million
2018 -- $98.4 million
2017 -- $92 million
2016 -- $89.7 million
