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COOK COUNTY CONNECTIONS 2022 Final Budget and Levy – Lake Superior News

By: Cook County Auditor Braidy Powers

COOK COUNTRY, MINNESOTA January 8, 2022 (LSNews) The district board held its truth-finding session in the courthouse on December 9 at 6:00 p.m. According to state law, the county must hold this meeting before setting the final budget and levy.

The purpose of the gathering is to give the public the opportunity to express their opinion and ask questions about the county budget. Four taxpayers attended the meeting, which was held in the Commissioner’s room and was broadcast live for those who were unable to attend in person.

On September 14th, the district approved a proposed tax increase of 4.5%. The increase was partially offset by a 1% increase in the county’s tax capacity for 2021. This means that the impact on a property without a change in value or class would be closer to 2% as the tax increase would be spread over more value.

The concerns raised at the meeting centered on fairness and equal treatment of taxpayers. Two written comments read at the meeting expressed similar concerns. While the purpose of the truth in tax meetings is the county budget, it was clear that the rating and classification influenced the fairness concerns. State classification and rating laws and regulations are largely intended to provide equal treatment across the state, but can sometimes result in large tax swings. This happens to some extent every year despite the appraiser’s best efforts to accurately classify and value properties.

This year was unusual, however, with an entire class of property affected and many commercial properties seeing double-digit tax increases on their TNT statements. The cause was a combination of a complex law called fiscal disparities and a sharp drop in commercial value.

A brief background to the Tax Disparity Act: The tax disparity only applies to commercial real estate. The tax was enacted by the legislator in 1995. It applies to seven northeastern counties, including Cook County. It is modeled on a law from the 1970s in the metropolitan areas of the Twin Cities. The purpose is to spread the growth in commercial value across the seven counties. The law stipulates that every year 40% of economic growth since the base year 1995 is fed into a “pool” and taxed at the “nationwide rate” of the seven-district area. The districts then receive a share back from this “pool” based on their fiscal capacity. The tax capacity is defined as the nationwide value per full-time resident. (Cook County has a low tax rate and high fiscal capacity so we have a big net loss every year, but that’s a story for another time).

The Sharp Decline in Commercial Value: A recently passed bill changed the classification of vacation homes across the state from commercial to non-homestead residential properties. This had a big impact in tourist districts like Cook and Lake. For example, in Cook County, trade value fell in half from 2020 to 2021.

Calculating the tax disparity: In practice, the 40% of economic growth recorded for the “pool” of tax disparity requires an additional step. The 40% is then divided by the total trade value of the following year. Total advertising in Cook County fell by half and in some areas by more than half. In the areas hardest hit by the decline, 100% growth in commercial real estate was taxed with the high tax disparity. This led to the double-digit increases. The good news is that this is an anomaly and is self correcting. The calculation of fiscal disparity will normalize again in 2023. The bad news is that under the unusual circumstances, this can happen again and only a change in the law can prevent it.

At the next board meeting on December 14th, the commissioners discussed some possible changes to the budget, including an increase in cyber insurance, meal reimbursement rates and commissioners’ salaries. The board has given final budget approval by December 21, pending further information on these costs.

On December 21, the board approved the General Services Administration meal reimbursement rates. This is a federal program that sets food prices that vary for different areas of the state and the actual cost of the country. The district used a uniform tariff and has not adjusted this tariff for many years. The benefit of the GSA program is that reimbursement rates are much closer to real costs in metropolitan areas. The cost of moving to GSA tariffs is estimated at $ 7,500 in 2022, assuming face-to-face meetings return to pre-pandemic levels.

The board also approved a year-long cost of living increase for committee members’ salaries. Commissioners’ salaries have not changed since 2003 and some increase is overdue. The total cost of this increase, including taxes, is estimated at $ 3,012 in 2022. However, the biggest budget changes since September have been a federal grant of $ 134,000 for public health and the allocation of $ 116,000 from the American Rescue Plan for public health and human services. These revenues resulted in a 12% decrease in PHHS ‘tax filing for 2022. The board also discussed the 9.3% decline in health insurance rates in 2022 and the likelihood of higher rates in 2023. The decline, believed to be partly due to the postponement of elective surgeries and other healthcare benefits due to COVID-19 , will likely not be repeated.

With these and other changes, the increase in the municipal tax would have been 2.21%, which is well below the average tax increase of 4.36% over the past 22 years. The Board then had a long discussion about the desire to keep the levy low to take into account the current economic situation of taxpayers and the desire to keep the levy constant to avoid painful future increases. It was a well-grounded, thoughtful discussion that resulted in a final compromise and the approval of a 3% tax hike for 2022.

By: Cook County Auditor Braidy Powers
Photo by Laura Muus

County Connections is a cutting-edge column and service information from your Cook County government. Cook County Community Support Through Quality Public Service

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Cook Country Minnesota Lake Superior News

Located at the tip of Minnesota’s Arrowhead region in the remote northeastern part of the state, Cook County stretches from the shores of Lake Superior to the border of the United States and Canada. By land, it is bordered to the north by Ontario, Canada, and to the west by Lake County, MN. The highest point in Minnesota, Eagle Mountain is 2,301 feet and the highest lake, total area is 3,339.72 square miles

Cook County is home to three national protected areas:
Grand Portage National Monument
Superior National Forest
Boundary Waters Canoe Area Wilderness

Cook County includes:
Grand Marais Lutsen Mountains
Gunflint Trail Superior Hiking Trail
Great portage

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