After looking around every corner and under every rock for ways to save taxpayer money, the Steele County Board of Commissioners finalized the 2023 budget.
On Tuesday, the commissioners unanimously approved a tax levy increase of 3.6% — $973,720 more than the 2022 levy. The 2023 budget was approved at just over $62.5 million.
Drivers for the 3.6% increase include a variety of things, but County Administrator Scott Golberg highlighted cyber security threats; rising costs in supplies, utilities and building materials; increases in personnel costs; and significant capital needs as primary factors.
The Tuesday meeting included the truth-in-taxation (TNT) public hearing, which allowed members of the public to learn and asked questions about the tax levy and budget. During the public hearing, Golberg addressed the glaring issue of the increase in residential home valuations this year, causing a dramatic increase in taxes for most — if not all — homeowners in the county.
“This is really unique,” Golberg said. “We went through an unprecedented pandemic, and now I guess we are going through an unprecedented property value change, particularly in the residential area — that’s where the major property tax shift happened.”
Due to the competitive and expensive housing market seen in late 2020 and throughout 2021, many Steele County residential properties saw a significant increase in their proposed taxes for 2023 — with an average increase of 20%.
Explained by County Assessor Tom Reineke, the property valuation process to determine the 2023 taxes began in January, as his office compiled the information they monitored, including property sales between October 2020 and September 2021. Steele County is mandated by the state to value properties at their market value, which is based on sales.
According to the Assessor’s Office, there were up to 800 home sales made in Steele County during that time frame. Additionally, Reineke said the sales have “been through the roof,” with some people bidding anywhere from $50,000 to $100,000 more.
“We have to contend with that and keep our values at market values,” Reineke said. “Some people saw $100,000 in their value year over year.”
When asked what would happen if there was a housing crash, Reineke said assessors are truly “historians,” looking back 18 months to a year to set values.
“It’s going to take time to set up,” Reineke said. “We are anticipating a market correction. We are seeing prices on residential properties start to be reduced, but they’re still trading for sale prices over what my assessed value is.”
Though a market correction is quite possible in the upcoming years, Reineke warned those in attendance that it doesn’t necessarily mean taxes will go down. In fact, Reineke said, following the market crash in 2008, when the valuation of his own home went down, his property taxes still increased, as the valuations simply help determine how much of the tax burden different properties will take on, not the specific amount of what will be paid.
In November, Reineke alluded to a shift in the tax burden happening in 2024, specifically because the sales of agricultural properties are continuing to increase by up to 30%. Neighboring areas, such as Olmsted County, are also seeing an increase in industrial properties in the double digits.