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Dakota County Considers Flat Levy, Rising Tax Rate

Market Value Homestead Exclusion program has big impact on budget's bottom line

Editor's Note: Dakota County Commissioner Tom Egan represents Mendota Heights, Lilydale, Mendota and a  portion of Eagan. He was elected to office in 2004 and is now serving his  second four-year term. Egan will write  regularly to Patch readers about county government.

The Dakota County Board of Commissioners reached a major milestone Nov. 29 in the extensive process of setting the 2012 county budget and tax levy by holding its truth-in-taxation public hearing. This year-long process began with an early strategic planning session setting the county's priorities, goals and objectives followed by quarterly meetings to review progress on those priorities and budget meetings during the summer leading to the setting of a preliminary levy on Sept. 13, and further budget meetings on Nov. 1-3.

The process this year was very difficult just as it has been for the last three years. The county provides access to, and administration of, the social safety net services such as employment assistance, housing, medical assistance etc. for the residents of Dakota County, and this constitutes approximately half of the Dakota County budget. Most of what we do in these areas is under total state mandate or direction and is supposed to be at least partially supported by state funding. However, this becomes more challenging during a recession like the one we've been experiencing where the demand for social safety net services is growing while the resources to pay for those services continues to shrink.

The recovery from this recession has been painfully slow. In Dakota County, the number of "official" unemployed doubled between 2007 and 2010. Even in September 2011, there were more than 13,000 Dakota County residents reported as unemployed.

The State's $5 billion deficit for 2012/13 has resulted in cuts to local governments such as Dakota County, including cuts in funding for those social safety net programs mandated by the state. General state aid to Dakota County as forecast in the state budget has fallen from $29.3 million in 2009 to an estimated $21.3 million in 2012—or a drop of 27 percent. State grant money for social safety net programs have been dramatically reduced as well.

During this past legislative session, the state eliminated the "Market Value Homestead Credit." This credit to local property taxpayers by property taxing jurisdictions was in theory to be reimbursed by the state to local governments such as Dakota County. This was replaced by the "Market Value Exclusion."

Local governments such as Dakota County still credit property tax payers on a sliding scale from homes valued at $76,000 (the highest percentage credited) to homes under $413,000 (the lowest amount credited) after which the credit is eliminated. However, the state no longer reimburses local governments for that credit. This saves the state $261 million to help reduce the state deficit; but it merely shifts responsibility for that amount to Dakota County and other local units of government who now have to raise property taxes from a shrunken local tax capacity.

For that reason, although the Dakota County tax rate will increase by 7.7 percent for 2012:

  • None of this is due to the county collecting more property taxes.
  • About one-third of this increase is due to the "normal" decline in property values due to the recession we have experienced.
  • About two-thirds of this increase is due to the State Market Value Exclusion.


While all local units of government are struggling with these issues, Dakota County stands out among counties as having the third-lowest tax rate in the state, the lowest tax rate and the lowest number of employees per capita of any metro area county.

At the Truth-in-Taxation public hearing held on Nov. 29, the county's proposed budget was presented. This proposed budget will reflect a 2012 levy of $129.4 million, which is exactly the same as the 2011 levy. This budget also reflects a 2.2 percent decrease in the county's operating budget. While several residents attended this public hearing, only one gentleman from Inver Grove Heights addressed the Dakota County Board. He thanked the board for keeping a control on county spending.

The Dakota County Board will formally adopt the 2012 budget and levy at our meeting on Tuesday, Dec. 13, 2011.

Related Topics:Dakota County Commissioners, Dakota County Taxes, Market Value Homestead Exclusion, and Property Taxes

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