Cook County commissioners held the 2015 Truth in Taxation meeting on Thursday, December 4, 2014 in the commissioner’s room with about 25 people attending.
Cook County Auditor- Treasurer Braidy Powers briefly went through a 42-page explanation of mandated and non-mandated expenses, a history of the levy, a county department budget review that highlighted the general fund, the road and bridge fund, and the human services fund, and how the assessor estimates value for houses, cabins and property.
The county board is looking at a 2015 levy of $6,536,740, up 7 percent from the 2014 levy of $6,109,10.
Seasonal residents paid 50.4 percent of Cook County’s property taxes in 2014, while homesteaders paid 21.3 percent. Powers noted that seasonal owners in the past have paid as high as 61 to 62 percent, “so it is less.”
The taxable market value of all taxable property in Cook County in 2014 was $1,637,360,000, up from the 2013 taxable market value of $1,607,615,400.
When it comes to paying property taxes, Cook County residents pay the least (or very nearly the least) of anyone living in the state’s 87 counties, said Cook County Commissioner Heidi Doo-Kirk.
However, noted Commissioner Garry Gamble, “Because there is only 8 percent private land, per capita we are the highest taxed.”
Citizens question
It was with this backdrop that questions came from the audience. Many, like Gina Nelson Schliep, said the taxes on her business in Grand Marais went up far beyond her expectations. “They went up $4,000. Where do I get that money to pay them?” she asked.
Charles Maryland of Grand Portage took issue with the statement that Cook County residents are charged less than anyone else in the state. He said he paid more in property tax for his 2,400-squarefoot cedar-sided house in Cook County than he did on his luxury, 5,000-square-foot house located in Oak Grove, Minnesota.
He also noted that he paid 22 to 23 percent more in groceries, paid more to fill his propane tank, paid more to fill his vehicle with gas. “Everything I do in Cook County is ridiculously expensive. But I live here because I like the land, the moose, the bears, the eagles, and fish.”
Maryland next asked commissioners why he was taxed for things he would never use like the YMCA or community education or social services. He said he didn’t have an issue with paying taxes for the school or hospital, but asked if there was a way people could not be taxed for services they didn’t use or support.
Jim Boyd, who lives west of Grand Marais, had a different perspective. He said he lived in a 3,000-square-foot house and paid $1,500 a year in property taxes. “I’m here to tell you my taxes are too low. It would be reasonable for my taxes to double.”
Boyd said that if his house were in Wisconsin his taxes would be $4,000 or more.
Boyd said taxes can be too high, but they can also be too low. He advocated for establishing levies that weren’t “minimalist” and would ensure that money would be there to fix roads or to properly fund the planning and zoning department or sheriff ’s department, etc. He also said it was clear with cutbacks to the U.S. Forest Service that the county would have to take over care of Forest Service roads to maintain them. He advocated for establishing a certain yearly percentage raise, which would be a more “efficient and effective” approach to setting the levy in the future.
Diane Hagen had the opposite thought of Boyd, “We’re getting taxed out of Cook County,” she said. “We might have to sell because we can’t afford our taxes and we have lived here all of our lives.”
Hagen said this year one of her properties went up 81 percent while another went up 134 percent.
Ron Lund said one piece of land he owns with his brothers was valued at $82,500 in 2013 and $190,000 this year. He said he had it appraised and it didn’t come close to being valued at $190,000. He also said his rental cabins were assessed $60,000 higher this year than last year, but after he had the assessor come to his establishment she dropped his assessment back down to, “a little less than last year.”
Commissioner-elect Jan Sivertson who owns Sivertson Gallery said, “I feel your pain. Property values took a steep increase this year. I had my property appraised and it is exactly the same as the county’s appraisal. It was a shock when I got my property tax statement, but it had been so low I knew it was going to go up.”
Outgoing District 5 Commissioner Bruce Martinson said that in his 12 years as a commissioner, “I’ve seen more fairness from the appraiser’s office now than ever before.”
Martinson said he used to receive calls from neighbors who complained about their assessments when compared to other neighbor’s assessments but that has stopped in the last few years.
Gamble said the county is using the quintile process mandated by the state, which states that properties have to be assessed every five years. “This means physically the assessors office staff has to visit 20 percent of all parcels in the county every year.”
Sandy Everson said she and her husband’s property taxes have gone through the roof the last few years for their home in Grand Marais and cabin on an inland lake. “We are going to have to do something,” Everson said, “We are being taxed almost $7,000 per year.” Nelson Schliep added that the commercial scene in Grand Marais was getting especially hard hit. “The numbers just don’t work. We’re seeing more and more empty buildings around town, more skeleton businesses.
It’s no wonder restaurants have to charge $12 for a hamburger.”
The county board began the process June 24 when it discussed budget priorities and budget preparation guidelines. Initial requests from departments and non-mandated programs totaled a 27.8 percent increase over the 2014 budget. Since that time the board has whittled it down to 7 percent, and it may fall further once the December 13 deadline for the highway department to notify the auditor of Subordinate Service District Assessments is in and any decision by a city or town to certify special assessments is sent to the county auditor. Fund balance is necessary
In 2014 the county board didn’t increase the levy but did borrow $513,241 from its fund balance to keep it in check.
Commissioners don’t have that option this year, said Powers, because the fund balance is nearing 75 percent. “If reserves were to fall below 75 percent of operating expenditures we would likely get a lower Standard & Poor (S&P) bond rating.”
The county’s 2014 S&P bond rating is currently double A (AA); the second highest rating a county can receive and about the highest Cook County could ever get based on its size, said Powers. A lower bond rating would mean the county would pay more in charges and interest to secure bonds for big projects, he said.
Powers said the average annual increase in the levy over the last 25 years has been 3.25 percent. For the past four years it has been held just under 1 percent while the Consumer Price Index has raised an average of 2.2 percent annually.
“While the county has held the levy down during a period of recession, our costs of doing business—providing services—have inflated with everything else (contracted work, personnel, purchased good, energy costs, etc.),” said Powers.
Plus, this year the county learned that because of reductions in Boundary Waters Canoe Area Wilderness revenue (due to sequestration) and Secure Rural Schools funding reductions, “We are losing over $241,000 in revenues for 2015. This directly impacts the levy in the amount of 3.7 percent,” he said.
Also, Powers noted, “Due to the recession of 2009, the county is also budgeting $165,000 less investment revenue than in 2014, which has a 2.5 percent impact on the levy. Counties are not allowed to invest in the stock market. We are limited to CDs, treasury and government bonds etc. which have remained stagnant since the recession.”
The general fund absorbed cuts in state aid from a high of $1,088,742 in 2002 to a low of $92,327 in 2008. Powers said the purpose of state aid was to assist counties in keeping local property taxes low.
Property assessments, noted Powers, affect taxes, but are not set by the county board. The Cook County Assessor’s Office determines assessments based on comparable historical sales and other criteria, said Powers, and members of the public have the right to take their concerns about those assessments to the assessor’s office for explanation, he said.
Meanwhile statewide the preliminary maximum levies for all Minnesota counties totals $7.93 billion, up from $7.2 billion levied in 2014.
Minnesota Revenue Commissioner Myron Frans said that in 2013 and 2014 increases for cities and school districts were about twice as large as last year, mostly due to state and local officials trying to provide more local aid to help reduce levies and produce more tax refunds.
This year, however, Frans said local governments are facing pressure to spend more on roads, salary increases and other infrastructure. This is what Cook County commissioners have also been saying as they get ready to make their final determination for the 2015 levy.
The levies for all counties must be set by December 30, 2014, said Powers.
Anyone with questions on their property tax statements may call: . County Assessor Betty Schulz (218) 387-3650 . Auditor-Treasurer Braidy Powers (218) 387-3640
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