Olmsted County eyes potential tax increases, service cuts as state budget talks continue

Yahoo

10-05-2025

May 10—ROCHESTER — Olmsted County officials are warning property tax increases or service cuts are likely next year as state lawmakers continue to hammer out budget agreements.
"The Senate, the House and the governor have all created budgets, and all of them — each one of those — has a target that impacts counties in a negative way," Olmsted County Administrator Travis Gransee said.
With a looming $6 billion state deficit projected for 2028, Gransee said such shortfalls have historically shifted costs to counties with reductions of reimbursements and grants to local governments.
"Or it's an increase in the county cost-share for a service that the state has traditionally paid for," he said, noting lawmakers rarely opt to scale back mandates for county services.
Olmsted County Chief Financial Officer Wilfredo Román Cátala told commissioners at the end of April that early state budget proposals were estimated to increase county costs by $1.7 million to $3 million next year, with the added expenses rising to as much as $7.2 million in 2027.
Projected added costs by 2027 include a potential $1.6 million in annual county expenses for local residents in treatment through the Minnesota Sexual Offender Program and shifting as much as $1.7 million in support costs to the county to provide services to disabled residents.
Gransee said the early estimates have changed multiple times as state lawmakers work to hammer out agreements with May 19 looming as the anticipated last day of the session.
"We won't know what our target is likely until the end of the session, but we do know none of the three budgets that have been proposed at the Legislature are beneficial to counties," he said.
Some of the added cost comes from new legislation aimed at reducing racial inequities in existing systems, especially work related to out-of-home placements of children through child protection and related programs.
Román Cátala said the new work isn't expected to increase county expenses in 2026, but it could have a $435,000 to nearly $1.3 million impact in 2027, equal to nearly a 1% tax levy increase on the high end.
Gransee said the local impact is likely reduced compared to other counties, since Olmsted County social workers are already doing some of the work that will be required.
At the same time, he said, adding to the workload could cause a need to shift some priorities, in order to prevent staff burnout and maintain expected efficiencies.
Commissioner Gregg Wright voiced frustration with the potential for added work on the county's shoulders without state money to support it.
"In my opinion, funding should follow the mandates," the District 3 commissioner said.
While Gransee pointed to the potential to trim services, Wright said commissioners have limited options.
"We have a very narrow range of decision-making, because they have already given us the mandates to carry out what the state can't do for itself," he said.
Gransee agreed the county has limited options on what it does, but pointed to flexibility in how the work is accomplished.
"We don't have a lot of authority over what we can and can't do," he said. "We have authority over to what degree and at what level we can provide a particular service."
With roughly 31% of the county's $428.6 million budget linked to staff expenses, he said some savings could be found through reductions, which would lead to providing less service.
Stopping short of discussing potential layoffs, he said the staffing budget could be reduced in the coming years by not replacing employees who retire or seek work elsewhere.
The commissioners have already pulled back on some planned construction and remodeling projects, but Gransee said it's likely not enough to meet future budget impacts.
He said it will be up to commissioners to determine how they want to react to any legislative decisions that will require local adjustments to address the statewide budget concerns.
"It is very unlikely that we will be able to find a decision that we are going to make here, based on that delegated authority and delegated responsibility by the state, that isn't going to impact our community. We are either going to raise their taxes or reduce the service," he said. "There is no sugar-coating that or making a way around that."