Dakota County homeowners are likely to see a sizable increase in the county portion of their property tax bills next year, but exactly how large that increase will be remains unsettled as commissioners work through a difficult 2027 budget.
After starting the summer with scenarios ranging from a 13.9% property tax levy increase to 24.3%, Dakota County has narrowed the discussion. At an Aug. 4 finance work session, County Manager Heidi Welsch presented three refined scenarios, a 21.2% increase, an 18.7% increase and a 16.3% increase. The county's presentation made the change rather obvious, placing large orange Xs through both the original 24.3% and 13.9% scenarios.
For the owner of a median-value home, the county estimates the 21.2% option would add about $167 per year to the county portion of the property tax bill. The 18.7% option would add about $145, while the 16.3% option would add about $123. None of those options, however, gets Dakota County through the budget process without spending reductions and staffing cuts.
That distinction between the levy increase and a homeowner's actual tax bill is important. A 20% increase in the Dakota County levy does not mean an individual homeowner's entire property tax bill increases 20%, because the county represents only one portion of the bill. Cities, school districts and other taxing jurisdictions have their own levies, while changes in property values and the tax base also affect what an individual property owner ultimately pays. Other local reporting quoted Commissioner Joe Atkins explaining that a 15% increase in the county portion would generally translate to less than a 3% increase in the overall property tax bill.
Even so, the numbers being considered are substantial by any measure, and the tradeoff becomes increasingly apparent as the proposed levy drops. At 21.2%, the county estimates it would still need approximately $5.4 million in expenditure reductions and a net reduction of about 10 full-time equivalent positions. At 18.7%, the manager's recommended scenario, reductions would climb to $10 million and roughly 23 net positions. The 16.3% option would require $14.5 million in reductions and approximately 56 net positions.
The original extremes help illustrate why the discussion has settled in the middle. A 24.3% levy increase was calculated to add about $200 annually to the median home's county taxes, but required no expenditure or staffing reductions. At the opposite end, a 13.9% increase added an estimated $111 annually but required $19.2 million in cuts, approximately 94 positions and what county staff characterized as major service eliminations. Both are now crossed off the county's refined scenario chart.
The budget problem did not arrive overnight. Dakota County's own financial presentation shows its unassigned fund balance declining from $130.2 million in 2014 to $63.9 million in 2024, $28.4 million in 2025 and a projected $1.2 million in 2026. The fund balance has provided the county with a financial cushion during a period of rising costs and changing revenues, but that cushion is now close to exhausted.
Commissioner Laurie Halverson summarized the situation during recent discussions, saying, "We need to right that structural imbalance now, unfortunately." She said reductions in federal funding and changes involving programs including SNAP and Medicaid have shifted roughly $10 million in additional costs onto the county.
County budget documents provide more detail on those pressures. New state and federal mandates and cost shifts identified for 2027 total approximately $7.4 million, including increased costs for Supplemental Nutrition Assistance Program administration and benefits, Medical Assistance recertification, long-term supports and services and a reduction in Community Corrections Act funding. Another approximately $2.3 million is associated with increased costs for state-mandated services, including court-appointed attorneys, regional treatment centers, out-of-home placements and social services grant reductions.
Those costs come on top of ordinary operating pressures. In July, county staff identified approximately $22.1 million in operational inflation, along with capital costs and several structural budget issues. One of the largest adjustments is an approximately $11 million change associated with eliminating a 4% salary savings target from the budget, essentially moving the county toward budgeting more realistically for personnel costs instead of assuming vacancies and other salary savings will cover part of the expense. The July calculation showed a total levy need of $44.8 million, or 24.3%, before commissioners began weighing additional reductions.
The cuts proposed under the remaining scenarios are not simply accounting adjustments. Even the 21.2% option, the highest remaining levy scenario, includes changes residents could notice. The county's list includes halting or pausing some park projects and programs, eliminating the Randolph school resource officer position, reducing public health services to clients, reducing child care licensing staff, combining front desks at the Northern Service Center and cutting county support for outside agencies.
For Hastings residents, the 18.7% scenario brings the effects considerably closer to home. That proposal includes everything contemplated under the 21.2% scenario, then adds another $4.6 million in reductions. Among them would be reduced hours at Pleasant Hill Library in Hastings, along with Heritage Library and Robert Trail Library. That change alone is projected to reduce staffing by 5.6 full-time equivalent positions and save approximately $700,000.
Additional library reductions under the 18.7% proposal include reduced interlibrary loan and substitute librarian capacity, fewer hours at Wescott, Wentworth, Burnhaven and Galaxie libraries, and a reduction in collections that could result in longer waits for books and other materials. Parks programming, events and visitor center hours would also be reduced.
Other proposed changes at that level reach well beyond parks and libraries. The county would seek cities to share more of the cost for embedded social workers, reduce Sentence to Serve and volunteer coordination in corrections, reduce Sheriff's Office criminal apprehension and jail programming capacity, eliminate park ranger positions and rely instead on local police departments and road deputies for park patrol. The scenario also calls for a $200,000 reduction in outreach to young people experiencing homelessness.
Dropping the levy to 16.3% would require another $4.5 million in reductions beyond the 18.7% scenario. The county estimates about 56 net full-time equivalent positions would be affected at that level, including approximately 38 positions currently occupied. Proposed reductions extend into Veterans Services, corrections, aging services, mental health, substance use disorder work, crisis response, treatment court programs and additional library materials.
Among the possible changes are reductions to services connected with the Justice Involved Veterans Court, elimination of Veterans Court and Drug Court program coordination positions in corrections, reduced services for aging residents, reduced community mental health support and the loss of 3.5 positions connected to crisis response work. County staff also identified another reduction in books and library materials at the 16.3% level. None of these reductions has been finally adopted, they are options showing commissioners what would be required to reach each levy target.
The county's own Aug. 4 presentation gives some insight into where commissioners may be headed. Welsch characterized the board's consensus as making correction of the structural deficit and rebuilding reserves its highest priority. Her summary of the board discussion also said a majority viewed the previous 18.9% increase as too high, while 13.9% was too low, helping explain the three new alternatives clustered around the middle.
The same presentation said there was a preference for making reductions in areas that could more easily be restored in future budgets, such as money set aside for new greenways and park improvements. Some board members also placed a high priority on avoiding layoffs and avoiding the elimination of positions when the underlying work could not also be eliminated.
That leaves commissioners trying to solve a problem with no painless answer. Raise the levy toward 21%, and property owners pay more. Push the number closer to 16%, and considerably more county positions and services are affected. Even the 18.7% middle option requires $10 million in reductions, which makes this less a choice between raising taxes or cutting spending than a decision about how much of each Dakota County residents are willing to accept.
Residents have already begun weighing in. Jon Lajambe, an Eagan resident of 34 years, said the prospect of another increase comes as households are already dealing with higher everyday costs. "It's very high here in Eagan I think the taxes are. And I'm sure they're not going down," Lajambe said. "We're just all trying to get by, with the war and everything, trying to make ends meet. Everything's more expensive."
Halverson said questions from residents about spending and possible reductions are appropriate. "They're asking really good questions. What are you spending the money on? Where can you cut? Are you lean? And I think the county has really good answers to that," she said.
The process is far from finished. Dakota County held its first budget and property tax open house Aug. 6 in Eagan, with two more planned. The next will be Thursday, Sept. 10, from 5 to 6:30 p.m. at the Western Service Center, 14955 Galaxie Ave. in Apple Valley. A Hastings session will be held Tuesday, Dec. 1, from 5 to 6 p.m. at the Dakota County Administration Center, 1590 Highway 55.
Commissioners are expected to establish the maximum proposed levy in September, with the current budget calendar calling for action by Sept. 22. That number acts as a ceiling, meaning commissioners can lower the levy as they continue working on the budget, but cannot later increase it beyond the maximum. The final budget and levy are scheduled for action in December, with the current calendar pointing to Dec. 15.
For now, the giant Xs on the county's own budget graphic may provide the clearest indication of where things stand. Dakota County appears to have moved away from both a 24.3% increase with no service reductions and a 13.9% increase accompanied by major eliminations, but the three remaining choices still call for a double-digit tax increase and meaningful spending reductions. The question commissioners face over the next several weeks is where, between those two uncomfortable ends of the scale, they believe taxpayers and county services can absorb the impact.