The Ramsey County Board on Tuesday set next year’s maximum tax levy increase at 4.75 percent, which was the proposed amount, while expressing growing frustration over what they say are inequities in funding from the state.

Ramsey and Hennepin are the only two counties in Minnesota that have County Program Aid slashed by 75 percent, which means property owners pay a larger share for county services than other Minnesotans via the tax levies, according to Ramsey County.

The Ramsey County sheriff, deputies’ union and some city managers previously wrote letters to the county board and county manager about the proposed tax levy. The deputies’ union contract expires at the end of this year and Sheriff Bob Fletcher wrote that, in order to remain competitive, he believes deputies should get at least a 22 percent raise spread over three years.

Concerns about recruiting and retaining deputies would “unlikely to be addressed” with a levy increase of 4.75 percent, Fletcher wrote previously.

Final tax levy to be set

Ramsey County Board Chair Victoria Reinhardt and Commissioner Nicole Joy Frethem (Courtesy of Reinhardt and Frethem)

Two commissioners, Board Chair Victoria Reinhardt and Nicole Joy Frethem, indicated during Tuesday’s meeting that they supported setting the levy higher “knowing the amount of needs,” Frethem said.

Frethem added that she knew other commissioners weren’t in agreement, and she and Reinhardt voted with the rest of the commissioners present to set the maximum increase at 4.75 percent.

Commissioner Rafael Ortega said he hears from constituents who are on fixed incomes.

“They need to keep their homes, and somebody has to hold the line,” he said. “So it’s a tough choice for us.”

Commissioners will set the final tax levy in December. The final levy increase can be less than 4.75 percent but it can’t be more, now that the maximum levy has been set.

The estimated impact on the county’s portion of 2025 property taxes for a median value single-family home in St. Paul will be a 4.2 percent increase, according to county officials. The total impact, including city, school district and other levies, is estimated at a 8.6 percent increase, or $330. The median home value in St. Paul is $275,300.

Commissioners urge changes to state funding

During Wednesday’s meeting, commissioners urged the state Legislature to fix County Program Aid, a funding stream that counties use to lower the property tax levy.

While Hennepin County is also affected, Ramsey County has more challenges, according to the county. That’s because Ramsey County has a high percentage of non-taxable properties, including the Capitol grounds, other government buildings, colleges and churches. Ramsey County is also more fully developed, so there’s little potential for new development or growth.

“Reliance on property taxes over income taxes (for County Program Aid) is inequitable, and those unfunded mandates disproportionately impact our most diverse communities,” Frethem said.

A part of County Program Aid, called equalization, is “a very complicated calculation of the county’s net tax capacity compared to the state net tax capacity in the population,” Frethem said. “And unfortunately, when they take that equalization aid, they cut it in four for Ramsey County. If you are a county with over 500,000 people, which is just Ramsey and Hennepin County … you will get 25% of that equalization aid that is calculated.”

For part of the aid calculation that is need-based — including the percent of the elderly population and measuring the people in poverty — Dakota County received about $9 million, by comparison, and Ramsey County about $20 million because “we have so much more need,” Frethem said.

But for equalization aid, Dakota County got almost $18 million, while Ramsey County’s share was $6.5 million. If it wasn’t cut in four, Ramsey County would receive $26 million.

“Which means we wouldn’t be approving a 4.75% increase” for the tax levy, Frethem said. “We could do the same amount of work if we got the full CPA while reducing our property tax levy.”

County Program Aid is only 3% of the county’s budget, Commissioner Mai Chong Xiong pointed out.

“It is a broken formula that … burdens people with the lowest incomes,” she said, adding that about one-third of Ramsey County’s residents have household incomes of less than $50,000.

The Dakota County Board of Commissioners set next year’s maximum tax levy this month at 9.92 percent, which would increase the county property tax by about $38 next year on a median-valued home of $372,500, according to Dakota County. Commissioners there will also vote on the final levy in December.

Outside review of HR recommended

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All current labor contracts in Ramsey County expire at the end of this year.

Commissioners have heard from multiple divisions in the county that their compensation is lower than what employees could make in other places, Frethem said.

“I know we’re going through negotiations right now, but I think we need help, and I would really urge our new county manager to consider bringing in a third-party consultant to help us really take a top-down look at how (Human Resources) is working or not working, and make suggestions for us,” Frethem said.

Commissioner Rena Moran said she agrees that an outside review is needed.