On Sept. 11, Houston County Finance Director Carol Lapham told commissioners that higher-than anticipated operating costs for the Houston County Justice Center, state cuts to county program aid (CPA) and the elimination of homestead credits will squeeze the county's budget next year. That will almost certainly result in higher property tax bills for residents in 2013.

"It (CPA) is now based on population and need, and according to the state, we don't have the need that we used to," Lapham reported.

Last year, Houston County's certified CPA was $906,225. For 2013 the amount is $725,016. It's important to note that not all Minnesota counties were cut.

"We've lost $181,000, but at the same time, Hennepin County's CPA increased by over $1,000,000," Lapham said.

After she explained the situation, commissioners adopted a net increase of 9% for the 2013 proposed levy.

That's a worst-case scenario for taxpayers, it was pointed out. Last year, the board voted for a 12% proposed levy increase, and then trimmed the actual budget to nearly 0 percent.

The problem is the 0 percent adopted levy ran short in 2012, and the county dipped into its fund balance to make up an additional $350,000 in expenses, Lapham stated.

Even if the board raises the levy by 9 percent, the budget that county departments have so far proposed for 2013 will need to be trimmed by $964,415 in order to balance the books, she said.

"We've discovered that the amount budgeted for the Justice Center building operations will have to be increased," Lapham said.

In addition, salaries and benefits will go up by $300,493, and some "sizable capital budget requests" that were cut last year are back on the spending list.

"I know that we go through the budget, and we cut here and we cut there like Band-Aids," Lapham said, "but in the long run it's got to be (a reorganization) like the state is requesting for human services. The entire county is going to have to do that.

"It has to be a unified effort, where we don't spend as much and still provide the services that we do. We'll have to look at reorganizations in certain areas like Land Use, Human Services and Public Health."

"The operation of the new (Justice Center) building is extremely costly, and it's not going to go away," Chairman Jack Miller stated. "Sometimes you just have to say no."

Lapham answered that saying no isn't always allowed when mandated costs are figured in.

Miller replied, "We did not mandate furloughs, we did not lay anybody off, we did not impose a hiring freeze, but there are lots of options that we can look at. They may hurt, but they may be what we have to do. We can't just keep going, it's not feasible."

Lapham reported that if the 9 percent levy raise is retained in full, it will produce an additional $889,284 in tax revenue. That will bring the total assessed on local taxpayers to $10,770,209. The proposed budget at this point is $31,130,592.

The 9 percent proposed levy increase will be used to calculate the Truth in Taxation notices which will be sent out in November.

"I won't promise that we'll be able to get down to 0 percent this year," Miller added.

On a related note, Human Services Director Linda Bahr said that Houston County's maintenance of effort (MOE) requirements for mental health services will go from $474,000 in 2012 to $753,000 in 2013.

If that cannot be modified, the county could be required to pay back some state grant monies, she reported.

Bahr said that the only way to avoid new state MOE requirements is to join a service delivery authority (SDA).

"They're basically setting the goal really high as a way of encouraging people to join an SDA," she concluded.

Old jail to be rehabilitated?

The board voted to apply for a Minnesota Legacy Fund grant to study possible uses for the Historic Houston County Jail building.

The structure, which is on the National Register of Historic Buildings, has been vacant since the Houston County Justice Center opened nearly a year ago.

If accepted, the grant could pay up to $7,000 towards a re-use study, Houston County EDA Coordinator Jordan Wilms reported.

Wilms was asked to investigate possible expert sources to perform the study in case the grant application is approved.

"This is a good first step," Wilms said. "If we find out it would cost more than $7,000 to do this, we can always turn the money down."