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Posted on: December 1, 2021

County Budget Frequently Asked Questions

Wood blocks that have text stating, "Budget 2022". A calculator is in the background.

Frequently Asked Questions – County Budget

 By Dillon Hayes, County Coordinator

  • How does the County’s budget work?

    1. Minnesota Statute § 6.48 states that “the state auditor shall prescribe and install systems of accounts and financial reports that shall be uniform, so far as practicable, for the same class of [county] offices.” As a result, all counties use fund balance accounting with a specifically-prescribed chart of accounts to provide for different departments, revenues, expenditures, and other variables. Additionally, most counties operate on a standard calendar year (January 1st to December 31st, each year).

What this means, in practice, is that, near the end of each year, the County estimates revenues and expenditures for the next calendar year. Each department prepares a recommended budget for their accounts, within their applicable fund or department. This is compiled, and revised after consultation with the department heads, by the County Coordinator and Administrative Services Office staff. This budget is then reviewed with the County Board of Commissioners, who are responsible for approving a final budget before the end of the year.

During the year, funds are receipted into, and expended from, specific accounts. These are not like conventional bank accounts, but accounts within the County’s uniform chart of accounts. This helps differentiate between different types of revenues (grants, tax payments, permit fees, etc.) and expenditures (salaries, supplies, professional services, etc.).

  • What is fund accounting?

    1. Fund accounting is a method of accounting used by non-profits and government units to track the amount of funding assigned to different purposes, and the usage of that funding. The intent is not to track whether the entity has generated a profit, rather, it is designed to provide for accountability in the use of funds.

Using fund accounting, all revenues and expenditures are tracked by fund within the uniform chart of accounts. For example, most general government services (County Attorney, County Sheriff, County Assessor, etc.) are within Fund 01, the Revenue Fund; while Highway Department operations are all within Fund 10, the Public Works Fund. Within each fund, fund, department, and object codes (among others) are used to track specific financial transactions, for instance:

                Building Permit Revenue: Fund 01, Department 107, Object Code 5117 (01-107.5117)

                Gravel Crushing: Fund 10, Department 330, Object Code 6368 (10-330.6368)

                Debt Service, Principal: Fund 35, Department 867, Object Code 6701 (35-867.6701)

  • How does the County calculate the levy?

    1. The levy is the amount of property taxes needed to fund operations. Basically, the difference of total expenditures and total revenues.

Expenditures – Revenue = Levy

  1. There are some exceptions that aren’t included in this calculation. This includes restricted revenue funds, such as grant funds, which can only be used for specific purposes. This also includes certain expenditures like County Ditch systems, which can only be funded with by special assessments levied for that specific purpose.
  • How are property taxes calculated?

    1. County property taxes are calculated by dividing the County levy by the total taxable net tax capacity (NTC) for the County to get a tax rate. This is then multiplied by each property’s NTC to calculate the amount owed by each property. This is repeated many times for each taxing jurisdiction (township, city, school, etc.). For 2022, the calculation looks like this:

2022 Preliminary Levy:                   $22,339,589

2021 Taxable Net Tax Capacity:  $26,434,370

2022 Preliminary Tax Rate:           84.510%

2022 Property Taxes:                      84.510% x 2021 Property NTC

  • Can there be a negative levy?

    1. Yes, a negative levy is possible. This occurs when the levy for the next year is less than the previous year. In fact, in the last 20 years, Mille Lacs County has had a negative levy on three (3) separate occasions, 2010 (-0.66%), 2012 (-0.49%), and 2016 (-7.63%).
  • If the County levy increases, does that mean property taxes will increase?

    1. Not always, there have been a number of occasions in the last 20 years when the County levy increased and the tax rate went down. In 2007, 2008, 2015, 2019, and 2021 the County levy increased, but the County tax rate went down, meaning that, if a property’s value stayed the same year-over-year, their taxes would go down. However, there were also years where the County levy went down or stayed flat and the County tax rate went up.

This is applicable to the County portion, but it also holds true for other taxing jurisdictions as well. Because each taxing jurisdiction sets their own budget, and has their own tax rate, the total amount of property taxes due for a single parcel can vary greatly each year. Property tax statements also include, in most cases, some kind of special assessment. These are set independently of a taxing jurisdiction’s levy, so these assessments can raise or lower total property taxes on a parcel, even if that property’s value and all associated tax rates go down.

  • How is law enforcement funded?

    1. Law enforcement is funded in large part by property taxes. There are some grants and other revenue sources that help to reduce the property tax burden, but that only accounts for approximately 9.3% of the Sheriff’s Office budgeted expenditures for 2022, meaning that 92.7% of operations are funded by property taxes. This holds true for other departments involved in law enforcement, such as the County Attorney’s Office and Probation, which also receive a majority of their funding from property taxes.

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