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Beltrami revenue rebounds

As the state struggled through budget deficits, the effect caused Minnesota counties to see flat results, says State Auditor Patricia Anderson. Anderson on Thursday released a report on counties' audited financial data for the year ended 2004, sh...

As the state struggled through budget deficits, the effect caused Minnesota counties to see flat results, says State Auditor Patricia Anderson.

Anderson on Thursday released a report on counties' audited financial data for the year ended 2004, showing that county finances remained essentially flat from the previous year with very little change in revenues and in tax dollars spent.

The state trend also showed in Beltrami County, which saw sharply higher revenues -- 12.8 percent -- from 2002 to 2003, but then slid with revenue decreases of 0.06 percent from 2003 to 2004 and 3.5 percent from 2004 to 2005.

The trend, however, reverses this year, with Beltrami County revenues in 2006, at $52.1 million, 16.6 percent higher than 2005. Most of the increase comes from state categorical aid, from $3.7 million in 2005 to $19.4 million in 2006.

Property tax revenues will actually decline this year, to $13.5 million, from $14.5 million in 2005, according to the state auditor's report.

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In 2004, Minnesota counties raised total governmental revenues of $4.46 billion to finance county services, the report said, representing a decrease of 0.3 percent over the amount raised in 2003.

The two largest sources of revenues for counties continue to be taxes and state intergovernmental revenues, which accounted for 39.8 and 31.7 percent of total revenues, respectively.

Over a five-year period taxes as a percent of total revenues increased from 37.3 percent in 2000 to 39.8 percent in 2004. Intergovernmental revenues increased its percentage of total revenues from 42.7 percent to 46.1 percent in 2002, but have decreased over the last two years to 42.1 percent in 2004. Charges for services increased from 9.2 percent to 10.6 percent over the same period.

In 2004, Minnesota counties expended $4.61 billion from governmental funds to provide county services, representing an increase of 0.6 percent from 2003 total governmental expenditures, the report said. Current expenditures decreased 0.5 percent, while capital outlay expenditures increased 2.6 percent, and debt service expenditures increased 14.7 percent.

During the five-year period of 2000 to 2004, total governmental revenues and total current expenditures increased every year until 2003, the report said.

"There is a marked difference for the years 2003 and 2004 compared to previous years," it said. The percent change in revenue and current expenditures remained relatively flat between 2002 and 2004.

"Overall revenues and expenditures were flat for Minnesota counties when compared with the previous year," said Anderson. "The revenues have declined mostly due to reductions in state and federal aid. Counties have seemingly adjusted their spending to reflect the decrease in revenue. It appears that counties were much more affected by aid cuts than cities, which continued to see strong growth in revenues and expenditures in spite of cuts."

The 2004 report showed $46.3 million in total revenues for Beltrami County, with $14.2 million from taxes and $1.76 million from special assessments. Federal grants totaled $4.48 million and state grants $15.4 million. The largest state grants were $8.8 million for human services and $3.8 million for highways.

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Charges for services amounted to $7 million, fines and forfeits $84,346 and interest earnings $884,317.

The report showed total expenditures of $53.6 million for 2004, with $10.7 million for general government and capital outlay, $11 million for public safety, $8.7 million for streets and highways, $13.2 million for human services, $2.116 million for health and $1.66 million for natural resources.

Of total expenditures, $42.6 million was current expenditures, $9.2 million capital outlay and $1 million debt service, the report said.

Counties reported a total of $2.07 billion in outstanding long-term debt at the end of 2004, Anderson said. It represents an increase in long-term debt of 6.5 percent over the year 2003.

The long-term debt was divided between $1.84 billion in outstanding bonds and $222.5 million in other long-term debt. Counties incurred long-term debt to finance a wide range of capital projects such as roads, light rail transit, government buildings, and other infrastructure improvements.

Beltrami County reported total bonded indebtedness of $17.1 million and $49,208 in other long-term debt. Most of the debt, $16 million, was in revenue bonds.

Beltrami County exceeded state recommended levels in another category that Anderson uses to judge county financial health.

Counties should have relatively large fund balances at the end of the year in order to meet expenditures occurring in the first five months of the next fiscal year, before the first property tax and state aid payments are received, she said. The unreserved fund balances of counties' general and special revenue funds totaled $1.77 billion in 2004, an increase of 3.2 percent over the level in 2003.

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Comparing counties' unreserved fund balances to their total current expenditures helps put the fund balances in perspective and provides insight on the relative financial health of Minnesota's counties, Anderson, a Republican, said. County unreserved fund balances as a percent of total current expenditures averaged 47.5 percent in 2004.

Among individual counties, unreserved fund balances as a percent of total current expenditures ranged from 22.1 percent (Kanabec County) to 178.9 percent (Blue Earth County). Taken as a whole, Minnesota counties fall within the correct range of between 35 and 50 percent of total current expenditures.

Beltrami County's ratio stood at 73.8 percent at year's end 2004, with a 2.7 percent increase from 2003 to 2004 in total unreserved funds.

The county reported $30.6 million in unreserved funds at the end of 2003, with $23.6 million as designated unreserved and $6.9 million as undesignated unreserved. The figures at the end of 2004 were $31.4 million in total unreserved, with $15.3 million in designated unreserved and $16.1 million in undesignated unreserved.

Commissioners have been using designated reserves for capital improvement projects, such as the Beltrami County Jail expansion, Courthouse renovations and other building projects.

Anderson labels counties with a ratio between 65 and 100 percent as having high fund balances. There were 26 of Minnesota's 87 counties in that category for 2004, up 12 percent from the previous year.

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