Mille Lacs County Budget 2022
Mille Lacs County is required to certify a preliminary property tax levy each September for the following year. The levy is based on the County’s estimated operating budget for the following year, and reflects the amount of property taxes needed to fund operations after accounting for other revenue and expenditures. In 2022, that amount is $22,339,589, which represents a 24.5% increase over the 2021 levy. The final levy adopted by the County Board was $20,832,340, which equates to a 16.10% increase over the 2021 levy.
The budgeting process starts in July with individual departments reviewing historical revenue and expenditure data, using that information to assemble their proposed budgets. These individual department budgets are reviewed with the Administrative Services Office and compiled to form the complete county-wide budget. Subsequently, staff meets with the County Board of Commissioners to review the proposed budgets and make adjustments before setting the preliminary property tax levy.
- Budget Summary Information. The chart below shows the net difference in actual revenue and expenditures, essentially, how far the County was “over” or “under” budget, for the last 8 years.
- Levy Impact. This chart shows how property tax dollars are allocated to each service area or department based on the preliminary budget for 2022.
- Revenue and Expenditures. These charts show how much revenue, outside of property tax dollars, is received by each service area or department; and, what it costs to “run” each department, based on the preliminary budget for 2022.
The increase being proposed for 2022 is a reflection of many variables; some of these items are unique to the 2022 budget cycle, while others have persisted (and may continue to persist) for years. Some of these variables include:
- Historically low levies with respect to inflation and actual costs. From 1997 to 2021 the levy has increased, on average, approximately 3.2% each year. In that same time period, inflation has increased, on average, approximately 2.31% each year. In six (6) of the last 15 years, the levy was 0% or negative. This doesn’t account for the 3% levy increase certified for 2021, which has already been exceed by increases in inflation.
Additionally, over the last five (5) years, the County has under-budgeted expenditures and/or over-budgeted revenue. As a result, fund balances have been drained to cover operation costs. This has reduced what would otherwise be a higher property tax levy, but fund balances can no longer cover operations in the event of an emergency or unexpected loss of revenue.
Additionally, the County is now operating significantly below those fund balance guidelines established by the State Auditor’s Office. The County’s 2020 Financial Statement, prepared by the State Auditor, lists a total unrestricted general fund balance of $7,641 at the end of 2020, 0.11% of what the minimum fund balance should have been.
- The ongoing lawsuit with the Mille Lacs Band of Ojibwe. The Mille Lacs Band brought a suit against Mille Lacs County, County Sheriff, and County Attorney in regards to the revocation of the cooperative law enforcement agreement in 2016. In response, the County was forced to obtain outside counsel, spending over $7 million to-date on attorney’s fees. In 2020 alone this accounted for over 16% of the total levy.
- Increasing costs of operations. The volatile health care and employment markets have necessitated regular increases to both wages and health care premium contributions. In order to retain qualified staff and provide a high level of service, wages have increased each year to keep pace with the market; in some cases, the County is contractually obligated to make these increases. The recent exodus of both long and short-term staff to adjacent counties and private employers has only made the situation worse.
Health care premiums have also increased dramatically year-over-year, outpacing inflation. Additionally, as a result of a State mandate, the County is now required to provide health insurance for an increasing number of individuals who are no longer employed by the County, a trend that is impacted local government units statewide.
- Increasing costs of out of home placement. In the last seven (7) years the cost of out of home placement, the court-ordered removal and placement of a child outside their parental home when it’s found that they’re in an unsafe environment, has doubled, from approximately $1.9 million in 2013, to $3.6 million in 2020. Approximately two-thirds of this cost is not reimbursed, and is therefore funded by the property tax levy. In 2020 alone out of home placement costs, after reimbursement, accounted for approximately 15% of the total property tax levy.
In adopting the final property tax levy for 2022 the County Board dedicated a significant amount to addressing these issues, and restoring operating reserves. However, in light of the significant burden levying for a complete restoration of operating reserves in one year would place on county residents, the County Board adopted a three-year plan to restore the county’s financial condition. This means that, in 2022, 2023, and 2024, elected officials and staff will be placing significant emphasis on continuing to reduce expenditures, and that the property tax levies for 2023 and 2024 will include funds dedicated to replenishment of operating reserves to a lesser degree than what was levied in 2022 for those purposes.
Please see the articles below for additional budget information for 2022.