Dakota County board pushes forward with 18.5% tax increase: 'This is painful'

HASTINGS, Minn. (FOX 9) - The Dakota County board pushed forward on Tuesday with a resolution that set the county's maximum property tax increase for 2027 at 18.5% despite protests by some commissioners.

While some commissioners raised concerns that the county was burdening taxpayers with too large of an increase, others pointed out the county was cash strapped and had no fund balance to lean on.

Dakota County votes on tax increase

What we know:

The Dakota County Board of Commissioners approved its preliminary maximum property tax levy Tuesday morning.

The 2027 levy will increase by 18.5% with 17% going towards operations and 1.5% going towards reserves.

The backstory:

Last month, FOX 9 reported that the county was considering three options, including one that could increase the property tax levy by as much as 21%.

Commissioners accepted an increase at 18.5%, which was slightly under the recommendations from county staff (18.7%).

What's next:

Tuesday's vote only sets the maximum increase for 2027. It's possible the county could find ways to reduce the increase between now and the final adoption vote in December.

However, on Tuesday, commissioners made it clear they didn't have many options.

Shrinking fund balance

By the numbers:

During Tuesday's meeting, Dakota County staff highlighted how the county's fund balance has been depleted in recent years.

The balance has dropped from $127 million in 2020 to a forecast of just $6 million in 2026.

Staff says the state auditor recommends that counties keep their fund balance at 35% of their expenditures.

Commissioners pointed out that's the reason Dakota County is facing such a drastic increase while other counties have been able to stabilize the increase this year.

Other metro counties are looking at an increase between 7% and 9%.

What they're saying:

Commissioner William Droste said the reason the county was in this position was fund balance.

"This is painful after 24 years in public service, difficult budget," said Droste​. "Each year, we'll be arguing with our state and federal legislators about passing costs down to us. But because of spending our fund balance down – It was good policy 10 years ago, over $130 some million – it far exceeded what the levy was at that time. However, we never stop spending and even in this budget, it's just over 8% just to fill the holes that we created in deficit spending."

"It's just that never have I ever, in my entire political career, voted for a double-digit increase and if you could understand the pit in my gut right now," said Commissioner Liz Workman. "It's it, I'm trying to get past that. So, if you're going to ask me to do, to vote for that, I absolutely need guarantees that excess amounts will be going straight into the reserve fund balance. And I don't want to just be told that, because I've heard this during our whole process. I need it memorialized. So that something like this doesn't ever occur because this is temporary."

"When you add this on top of the wheelage tax, which is over $4 million, which equates to about a 2.3% increase in spending, we're up over 20%," added Commissioner Mary Liz Holberg. "There's a lot of people hurting out there, particular people that are surviving on fixed incomes, whether it's Social Security or disability. This is a really big ask. I think it's too big. And I look forward to maybe there's some opportunities to make some reductions as we move towards December."

What's next:

Even after this year's increase, Dakota County could be facing another double-digit increase next year. A projection included in a presentation on Tuesday estimated 2028's tax levy increase could be as high as 11.6%.

The final adoption of the levy will take place in December, and it's possible the county could find ways to lower the increase.

The Source: Information presented during Tuesday's meeting and past FOX 9 reporting.