County tax levy to rise 5.5%


(1/2/2018)

by CHRIS ROGERS

There was good news and bad news for taxpayers after the Winona County Board’s 4-1 vote last Wednesday to approve the 2018 tax levy. The bad news: despite the county tapping its reserves, next year’s property tax levy will rise by 5.5 percent to a total of $18.4 million. The good news: the tax levy had been proposed to increase by six percent, and the County Board agreed to revisit the idea of downsizing county buildings, a move which commissioner Steve Jacob said would significantly reduce county expenses in future years.

Last week was the first time since 2014 that the Winona County Board was not split 3-2 over raising property taxes. There was give and take at Wednesday’s meeting. Jacob has consistently voted against tax hikes, but he offered to vote for a five-percent increase if his fellow commissioners would agree to reconsider consolidating county buildings. County Board Chair Jim Pomeroy seconded Jacob’s motion.

The county owns a number of buildings: highway shops in Nodine and Elba, a main highway shop in Goodview, the Law Enforcement Center in Winona, the nearby County Office Building at Third and Washington streets, the household hazardous waste building on Second Street, the courthouse, two smaller buildings used by the maintenance department and Sentence To Serve programs and to store the Dive and Rescue Team equipment, and Winona County Government Center at Fourth and Main streets. There is underutilized space at both the County Office Building and the Government Center, and in the past, the county has studied the idea of selling or renting the Winona County Government Center and consolidating its offices into other county-owned buildings. The concept has never gone anywhere. In 2015, the County Board directed staff to explore the possibility of renting out part of the Government Center, and in 2016, county staff were solicited by an organization interested in buying it, but neither one ever came to fruition.

The way Jacob describes it, consolidating buildings is one of the few things the county could do that would make a significant improvement in its budget. The Government Center in particular has expensive upcoming maintenance needs the county has been putting off for a couple years already.

Jacob acknowledged that even with a six-percent tax hike, Winona County would be operating at a loss in 2018 — relying on reserve funds to make up a budget deficit — but said that he wanted to do something to push for a lower tax increase, even if it was only slightly lower. “The reserves could handle one more percent,” he said.

Winona County Board Chair Jim Pomeroy seconded Jacob’s motion. Pomeroy and Jacob have often been at odds over tax hikes, but Pomeroy said Jacob’s proposal was reasonable. Their colleagues disagreed and Jacob’s original proposal failed with a 2-3 vote, with commissioners Marcia Ward, Greg Olson, and Marie Kovecsi voting against it.

 

Ward said she would not support any tax increase. “It’s no secret I have a great disdain for property taxes. I always have. I always will,” she stated.

Olson and Kovecsi voted against Jacob’s original proposal for just the opposite reason: they were concerned that only raising taxes by five percent — and drawing down an extra $87,000 from reserves — would leave too little left in the county coffers. The County Board does expect to drop below the reserve fund threshold that the board itself set in 2016. That policy requires the county keep reserves on hand equal to 40 percent of its total operating levy, so that the county can meet its cash flow needs in case of emergency. Even the proposed six-percent tax hike was projected to drain $684,000 from county reserves and leave the reserve fund below the required level. County administrator Ken Fritz has said the reserve fund policy was very conservative and the county could safely reduce its reserves further.

On top of the reserves being used to balance the 2018 budget, the County Board is expected make a significant expenditure of reserves in early January in order to bail out the Community Services Department fund, which as of November 30, had a balance of negative $965,080 and is expected to end the year in the red.

“I certainly don’t want to fall into the same shoes as the school district,” Olson said, referencing Winona Area Public Schools’ (WAPS) current fiscal situation. WAPS anticipates nearly exhausting its reserves in the coming fiscal year. Olson noted, too, the potential for low reserves to affect the county’s credit rating and its borrowing costs. “I think it’s important that we learn from our school district. We want to keep our reserves at our set amount, and even with this [proposed budget], we will be a little bit below, but probably safely so. But much less — if we lose our rating, it’ll cost our tax districts considerably more in the future,” he stated.

Olson proposed approving a six-percent tax hike along with Jacob’s suggestion that the county study building consolidation again. Jacob insisted that for him to vote for it, there had to be some reduction from the proposed six-percent tax hike. “Part of what I’m trying to do is go to bat for constituents who want a lower tax levy … I feel like at six percent, I’m not really making an impact that’s helping my constituents,” Jacob stated.

So, Jacob made a counteroffer: a 5.5-percent tax hike. It is better for taxpayers than six percent, Jacob said, adding, “A half-a-percent isn’t going to break our budget.”

Olson agreed. Kovecsi hesitated. “The only reason I’m struggling with it, is that it pulls more out of the reserves,” she said, before agreeing to go along with the compromise.

 

Pomeroy, Olson, Kovecsi, and Jacob all voted for the 5.5-percent tax increase. Ward dissented.

Olson, Ward, and Kovecsi all said that building consolidation deserves further consideration. “I think there were some unanswered questions about what could happen if we went in that direction,” Pomeroy added in an interview.

“They’re healthy,” Pomeroy said, when asked about the county’s reserve fund levels. Even at their lowest point this past year, there were still millions left in the county’s coffers, so the county can spend down some of its reserves and still meet its cashflow needs, he stated.

 

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