State could pass along funding responsibilities to counties
Possible state revenue shortfalls in 2018 could result in the state legislature passing along more funding responsibilities to Otter Tail County and the other 86 counties in Minnesota.
"Any future downturn in state revenues will put County Program Aid (CPA) funding in jeopardy," said Keith Carlson of the Minnesota Inter-County Association who spoke to members of the county board of commissioners on Nov. 28.
Minnesota has a state-mandated program that requires counties such as Otter Tail to deliver essential services such as public safety, human services and transportation on the state's behalf.
To help pay for these services, the state distributes funding to counties through CPA. The goal is to offset county tax levy growth.
Carlson said that even though Minnesota's economy is operating at close to full employment, additional economic activity is unlikely to offset a state shortfall.
Minnesota's individual income tax had a $257 million shortfall in the fiscal year that ended June 30, 2017.
"Looking to the state general fund to be a significant source of new transportation funding is just not in the cards," said Carlson.
Minnesota's gasoline tax dedicated for road and bridge improvement is currently at 28.6 cents per gallon. The federal gas tax is only 18.4 cents per gallon and hasn't been raised since 1993.
"Both of those taxes, state and federal, are woefully inadequate," says Otter Tail County Engineer Rick West.
Due to the no new taxes pledge, lawmakers in Minnesota and congressional leaders in Washington have no desire to raise gasoline taxes.
In recent months, in order to raise more money for roads and bridges, the county board set in motion a half-cent sales tax and instituted a fee added to license tab renewals. Fees, for the license tabs, are being raised from $10 to $20 in January 2018.
The $20 per vehicle license tab fee, also referred to as a wheelage tax, is expected to add close to $1.2 million in 2018. Proceeds from the half-cent sales tax should yield close to $3.8 million annually for roadway maintenance.
County residents could pay more for health, human services
Keith Carlson of the Minnesota Inter-County Association also says that residents of Otter Tail County and taxpayers in the other 86 counties will likely need to pay more to help fund health services and human services.
"Cutbacks at both the state and federal levels will likely be felt at the local level," said Carlson to Otter Tail County commissioners.
He said it's questionable whether Minnesota Gov. Mark Dayton will dip into the state's $1.6 billion reserve fund.
"Health and human services programs are the last to be funded and the first to be cut," said Carlson. "For that reason, county levies will probably rise, meaning property tax hikes for homes and businesses at the county level."
For its part, Otter Tail County sends board members and department heads to St. Paul each year to lobby for more state legislative assistance.
"We do our best to tell Otter Tail County's story," said Commissioner Wayne Johnson of Pelican Rapids. "It's our job to work in the best interests of our constituents, while meeting the needs of county residents."