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Levy limits raise questions at county
Cuts in Local Government Aid (LGA) and new tax levy limits imposed by the State Legislature is going to be a major concern for local governments, as well as a major source of frustration, as new budgets are constructed.District 1A Representative Dave Olin told the Kittson County Board of Commissioners that the state is looking at a possible $2 billion deficit, and that strapping .local governments with levy limits was the lesser of two evils.
Olin said the legislature had two choices, pass the total package with limits, or come back for a special session.
“The governor basically said he would not agree to anything that did not include levy limits,” Olin told the board.
Without the levy limits, the bill was very likely going to see a veto on the part of the Governor’s Office, he said.
The problem is limits imposed on the county come “after the fact”. In other words, in some cases, these local governments that are now strapped with a limit on their ability to raise revenues, have already committed to spending. Those commitments were based on their ability to raise revenues under formulas in place at the time the decisions were made. Now those formulas have changed.
Chairman Joe Bouvette pointed to contracts as an example. Kittson County has contracts with two separate employee unions that are negotiated over a two-year period. Changing those formulas after the fact will mean the county will very likely need to take revenues from other areas to fund and uphold the terms of the contracts.
“This hurts when you have already negotiated contracts,” Bouvette said.
Commissioner Craig Spilde wondered about the wisdom of the state government.
“We’re always trying to keep our taxes low here,” Spilde told Olin. “Now the state, is looking at a two billion dollar deficit, and is telling us how to manage our business. It’s ridiculous.”
Spilde pointed to another area where the state is cutting its costs on the backs of counties. He questioned the practice by the Department of Corrections where an inmate from a state prison is returned to the county to serve the last six months of his sentence.
Spilde said the state pays the county $10 a day for each inmate. Not enough, Spilde said, to cover the cost of meals provided by the county, much less all of the other expenses of housing someone in a county jail.
“You can’t even feed a person for that amount,” Spilde exclaimed.
The revenue problems that diminishing LGA and levy limits pose for the county are pretty much set. And realistically, there was little Olin could offer the county at this point other than a sympathetic ear.
According to Kittson County Auditor Marilyn Gustafson the levy limit imposed by the state allows the county to increase its levy by only 3.9 percent. Thee problem arises when the state also requires the county to increase its allocation to local function, such as the library, by as much as 9 percent.
The numbers just don’t work.
Since 2003 the state has also decreased the county LGA by more than half. During that period, and before imposing levy limits, the county made up those dollars through its ability to levy.
In 2003 the county received $710,340 in state aid. In 2008 it received $349,510. Over that period of time the county’s levy has increased by $360,184.
“That is a a direct correlation to what we were cut in state aids,” Gustafson said.
In the case of county employees, the cost of living increase was marked at 4.2 percent in May but the Consumer Price Index. That number will probably increase dramatically with higher costs of gas and other goods when new figures are announced later this month. Yet with only a 3.9 percent increase available, the county is likely to run into problems during future contract negotiations.
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Levy limits raise questions at county
Cuts in Local Government Aid (LGA) and new tax levy limits imposed by the State Legislature is going to be a major concern for local governments, as well as a major source of frustration, as new budgets are constructed.
District 1A Representative Dave Olin told the Kittson County Board of Commissioners that the state is looking at a possible $2 billion deficit, and that strapping .local governments with levy limits was the lesser of two evils.
Olin said the legislature had two choices, pass the total package with limits, or come back for a special session.
“The governor basically said he would not agree to anything that did not include levy limits,” Olin told the board.
Without the levy limits, the bill was very likely going to see a veto on the part of the Governor’s Office, he said.
The problem is limits imposed on the county come “after the fact”. In other words, in some cases, these local governments that are now strapped with a limit on their ability to raise revenues, have already committed to spending. Those commitments were based on their ability to raise revenues under formulas in place at the time the decisions were made. Now those formulas have changed.
Chairman Joe Bouvette pointed to contracts as an example. Kittson County has contracts with two separate employee unions that are negotiated over a two-year period. Changing those formulas after the fact will mean the county will very likely need to take revenues from other areas to fund and uphold the terms of the contracts.
“This hurts when you have already negotiated contracts,” Bouvette said.
Commissioner Craig Spilde wondered about the wisdom of the state government.
“We’re always trying to keep our taxes low here,” Spilde told Olin. “Now the state, is looking at a two billion dollar deficit, and is telling us how to manage our business. It’s ridiculous.”
Spilde pointed to another area where the state is cutting its costs on the backs of counties. He questioned the practice by the Department of Corrections where an inmate from a state prison is returned to the county to serve the last six months of his sentence.
Spilde said the state pays the county $10 a day for each inmate. Not enough, Spilde said, to cover the cost of meals provided by the county, much less all of the other expenses of housing someone in a county jail.
“You can’t even feed a person for that amount,” Spilde exclaimed.
The revenue problems that diminishing LGA and levy limits pose for the county are pretty much set. And realistically, there was little Olin could offer the county at this point other than a sympathetic ear.
According to Kittson County Auditor Marilyn Gustafson the levy limit imposed by the state allows the county to increase its levy by only 3.9 percent. Thee problem arises when the state also requires the county to increase its allocation to local function, such as the library, by as much as 9 percent.
The numbers just don’t work.
Since 2003 the state has also decreased the county LGA by more than half. During that period, and before imposing levy limits, the county made up those dollars through its ability to levy.
In 2003 the county received $710,340 in state aid. In 2008 it received $349,510. Over that period of time the county’s levy has increased by $360,184.
“That is a a direct correlation to what we were cut in state aids,” Gustafson said.
In the case of county employees, the cost of living increase was marked at 4.2 percent in May but the Consumer Price Index. That number will probably increase dramatically with higher costs of gas and other goods when new figures are announced later this month. Yet with only a 3.9 percent increase available, the county is likely to run into problems during future contract negotiations.