Rural Minnesota leader: Lawmakers, please support County Program Aid
ALEXANDRIA, Minn.—With tax relief a top priority as the session deadline draws near, legislators still have a chance to relieve local property tax pressures and fix a deeply flawed County Program Aid formula.
Rural Minnesota should hope they do.
Counties work to administer programs of the state. They are the local delivery system for critical and costly state-mandated programs related to mental health, child protection, family services, public safety, corrections and other areas.
When the state passes laws affecting these issue areas, counties are directed to carry out the program, and state revenues are appropriated to pay the costs in the form of aid to counties.
The primary revenue source for counties is local property taxes. Rural counties work hard to keep property tax rates affordable, while providing services to keep the county working.
The County Program Aid program was intended to cover the costs of state programs so that counties could reserve more of their property tax revenues for programs specific to the needs of their home communities.
Just over 10 years ago, the state consolidated several property tax aid programs into one general aid program called County Program Aid and instituted a formula for distribution. Revenues to fund the program have been dropping ever since.
For 2008-11, CPA payments were less than the levels that had been certified, due to state budgetary conditions. In 2010, the total appropriation was permanently reduced by about $34 million, then further reduced by another $32 million in 2011.
Impacts are widespread but particularly harmful to deep rural, ag-based counties with low populations. In northwest Minnesota, counties such as Kittson, Marshall and Norman have been particularly hard hit.
A full one-third of Minnesota's counties - mostly in the deep rural areas of the state—are struggling with a more than 50 percent loss of their CPA allocation in the past 10 years. Some 27 counties failed to get a portion of their CPA entirely.
Stevens County, which is located south of Interstate 94 and Fergus Falls, is a good example of a fiscally conservative county that has seen 86 percent of its CPA revenues disappear since 2005, due to reduced funding and a distribution formula that doesn't work anymore.
Stevens County avoided large property tax increases by conserving spending, deferring county improvement projects and spending reserves that had been set aside for unforeseen developments.
But a belt can only be tightened so far, and this year, the board reluctantly implemented a nearly 8 percent levy increase on property taxpayers. By comparison, the board approved a reasonable 4.1 percent increase in 2015 and held the levy to no increase for 2016.
Without the $25.5 million appropriation necessary to trigger the new formula change—which is supported by all of the state's 87 counties—the counties mentioned above and others across the state will be staring down significant pressures to increase property taxes this year on farmers, small businesses and elderly rural residents on fixed incomes.
Legislators should fix the formula, and fund the CPA fix this year.
Stratton, a Douglas County, Minn., commissioner, is chairman of Minnesota Rural Counties, a membership organization that advocates for rural county concerns.