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ROCHESTER — Olmsted County residents will have a chance Thursday to comment on the county’s 2023 spending plan and the taxes that will support it.
County commissioners recently reviewed the proposed $322 budget, which relies on nearly $119.5 million in property taxes.
Here’s a look at several factors connected to the plan.
1. The county’s property tax levy is set to increase by 5.9%.
The proposed $119.5 million property levy is a nearly $6.7 million increase over this year’s county-wide levy.
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County Administrator Hiedi Welsch said increased expenses, including inflation and the cost of employee benefits, are key factors related to the increase.
More than half of the new property tax funds – 57.6% – are expected to cover the cost of funding a continuation of baseline services.
2. County’s tax rate continues to drop.
While the county’s levy has increased, Wilfredo Roman-Catala, Olmsted County's chief financial officer, said the tax rate has been declining due to increased property values and new construction.
“It’s challenging to understand this, because my taxes at my home are not going down, but the amount of money globally that the county needs compared to the global tax capacity is being smaller every year,” he said.
The bulk of new construction throughout the county – 53% – was in the residential category last year, followed by 26.6% in apartments.
“The tax capacity is growing as our market model is increasing,” Roman-Catala said.
3. HRA’s flat levy rate will produce an extra $632,812 next year.
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The county’s Housing and Redevelopment Authority tax levy has been set at the allowed maximum rate for several years, but the county’s increased tax capacity means the funds collected increase each year.
As a result, the county will see a 16% increase – from $3.9 million to nearly $4.6 million – in funds collected for local housing efforts.
4. County collects an average of $755 in property tax per person.
When the county’s general and HRA levies are combined, they generate an average of $755 per county resident, based on the 2021 population.
It’s a $38 increase when compared to the tax revenue per person for this year
At the same time, the county plans to spend $2,033 per person in 2023, a $302 increase compared to this year.
5. Commercial properties pay 28.6% county tax, but account for 16.6% of market values.
Since property types are taxed at different rates, businesses and other commercial properties typically pay a larger share of the collected property taxes.
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As a result, homeowners, who account for 64.2% of total property values, pay 55.7% of the county taxes.
Owners of apartment complexes are the closest to paying a share based on value. They account for 8% of the county value and pay 8.1% of the tax, compared to ag land owners, who hold 11.2% of the value and pay 7.6% of the tax.
6. Among property types, ag land will see the highest median increase in county property taxes
Owners of farmland throughout the county will see a median increase of $120 in 2023, compared to this year, when they saw a $66 increase.
It compares to residential property owners, who will see a median increase of $72 for next year’s taxes, compared to a median $68 increase this year.
At the same time, 17.8% of ag land owners and 14.3% of residential owners will see no county property tax increase or a reduced tax bill next year.
The median increase for apartments is $1, while the median change in county property taxes for commercial properties is expected to be a $47 reduction.
7. County sales tax is expected to continue generating increased revenue.
“I thought this revenue source was going to dwindle, and it didn’t,” Roman-Catala said of pandemic predictions.
The county saw sales tax revenue drop by approximately $250,000 in 2022, but increase by $800,000 the following year.
The estimate for 2022 is $17.5 million, with $18.2 million anticipated next year.
8. The county has kept new hires in line with population growth.
Since 2017, Olmsted County has maintained approximately 75 employees per 10,000 county residents.
“It allows us to only increase as fast as our population is increasing,” Welsch said of the ratio that fluctuated between 70 and nearly 90 employees since 2001.
Employee salaries and benefits account for 41% of overall county spending in the proposed 2023 budget.
The county added the equivalent of nearly nine full-time employees since budgeting last year, and another seven are included in the proposed 2023 budget.
Of the new positions, several are funded through state grants and other funds. The added cost to the tax levy is $564,256, due to new salaries and an adjustment to the county’s compensation plan.
9. Some projects are on hold, but others will move forward.
Welsch said some planned improvement projects and new construction has been delayed amid increased costs, but maintenance work, such as a new roof for the city-county Government Center, will move forward.
“We didn’t want to lose ground on the deferred maintenance that we’ve been catching up on during the last few years,” she said.
Roman-Catala said most spending on new projects is reflected in the $23.4 million the county plans to borrow through the sale of bonds. It accounts for 7.26% of the total county budget.
10. Residents have a chance to weigh in.
Olmsted County commissioners will hold the county’s annual truth-in-taxation hearing at 6 p.m. Thursday in board chambers of the city-county Government Center.
The hearing includes a budget presentation by staff and a chance for residents to speak about the budget and their anticipated county taxes.
Other meetings related to city and school district taxes are held by the councils and board of those taxing authorities, and details regarding the meetings are included on the statements of proposed taxes mailed to property owners this month.
