Itasca County Hits a Revenue Snag

Posted 3 days ago

printed from Hibbing Tribune.

Itasca County appears to be at a 10-year low with its Revenue Fund balance. During a work session of the Itasca County Board on March 1, commissioners were shown an analysis for its Revenue Fund, Road & Bridge Fund and Health and Human Services Fund dating back to 2006. Presented by Jenni Johnson of the Itasca County Auditor/Treasurer’s office, the information shows the county’s Revenue Fund balance at about $11 million in 2006 and accounting for about 55 percent of the county’s total revenue; for 2015, this fund was at approximately $3 million, or approximately 10 percent of total revenue. As Johnson explained, counties are recommended to maintain revenue funds at 35-50 percent of total revenue.

The analysis was part of an update on the county’s trial balance, or listing of general ledger accounts showing debit and credit, for December 2015.

In answering the big question of what is driving county revenue down, Johnson said it’s looks to be a combination of planned and unplanned reserve spending as well as spending over budget.

Itasca County Administrator Trish Harren said the Sheriff’s budget has been underfunded by about $1.5 million each year.

Johnson responded, “It’s either not budgeting enough or spending too much, whatever way you want to look at it.”

A five-year historical analysis of tax revenue illustrates property tax and penalty collections up from about $29 million to $35 million. In comparison, also part of the presentation was a five year graph of salaries, overtime, and retirement expenses. This shows an incline from about $24.5 million in 2011 to nearly $31 million in 2015. A separate chart of overtime only shows this up from $900,000 in 2011 to approximately $1.6 million in 2015.

“Overtime, over the past five years, has essentially doubled,” commented Johnson who listed employee development training as well as attorney fees as other significant reasons for increases in spending.

In addressing the overtime issue, Harren said the county has come to a point that departments are using overtime in lieu of hiring full-time additional employees.

She also said, with several retirements especially in health and human services, new employees typically take more time to become as efficient as the individuals they are replacing.

“But the key to the overtime is law enforcement and this is something Vic (Sheriff Williams) and staff are working very diligently on,” added Harren.

Another hot topic during Tuesday’s work session was management of the Itasca County Fairgrounds. Itasca County Land Commissioner Garrett Ous presented a draft proposal for a master management plan for the fairgrounds park area. As Ous explained, the county is moving toward “more assertive” management of maintenance and operations at the fairgrounds “primarily for risk management” and handling of contracts.

As stated in the draft plan recommendations, while the grounds and buildings were owned by the county in the past, the Agricultural Association was given the responsibility of operating, maintaining, repairing and replacing all of the buildings, grounds and structures with limited funds from the county. This new plan proposes a management structure that will provide a means for the county to share in the cost and management of the park. The county will provide and monitor new funding sources for the repairs and replacement of the buildings and the structure. County staff will be available to assist with contract development and supervision.

As Ous explained, the county would contract with the Agricultural Association to manage the fairgrounds and the fair event. The county and the Agricultural Association were expected to review the latest version of the management proposal this week.

“The Ag Association is looking for direction,” commented Commissioner Terry Snyder.

The draft proposal shifts arrangements from lease-based to a professional contract agreement for specific services, explained Administrator Harren.

In other business this week, the county board:

• Heard an update on a grant agreement for Firewise Chipper Days.

• Heard an update on Minnesota Power’s Great Northern Transmission Line project from Matt Hagelin, a real estate specialist with Allete. After receiving route approval last week, plans are moving ahead for the line with activities for 2016 to include contacting land owners in the area for point of entry to perform surveys of the route, according to Hagelin.

“We’re anticipating activity later this year in clearing right of ways,” added Hagelin.

• Heard preliminary news of a possible lodging tax proposal by the Lake Winnibigoshish Lake Association.


Grand Rapids Voice Question of the Week:

non profitQUESTION:  What is the Definition of a Non Profit Organization?

The term nonprofit under the law can come in many forms, cover many organizations and a conversation covering such topics needs to first speak of the why. Why do nonprofits look and feel different than some other organizational structures in the for-profit arena and why would you want such a statues for your organization.

Let’s start with the definition.

A nonprofit organization (NPO, also known as a non-business entity]) is an organization whose purposes are other than making a profit. A nonprofit organization is often dedicated to furthering a particular social cause or advocating for a particular point of view. In economic terms, a nonprofit organization uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus income to the organization’s shareholders (or equivalents) as profit or dividends. This is known as the distribution constraint. The decision to adopt a nonprofit legal structure is one that will often have taxation implications, particularly where the nonprofit seeks income tax exemption, charitable status and so on.

The terms nonprofit and not-for-profit are not consistently differentiated across jurisdictions. In layman’s terms they are usually equivalent in concept, although in various jurisdictions there are accounting and legal differences.

The nonprofit landscape is highly varied, although many people have come to associate NPOs with charitable organizations. Although charities do comprise an often high profile or visible aspect of the sector, there are many other types of nonprofits. Overall, they tend to be either member-serving or community-serving. Member-serving organizations include mutual societies, cooperatives, trade unions, credit unions, industry associations, sports clubs, retired serviceman’s clubs and peak bodies – organizations that benefit a particular group of people i.e. the members of the organization. Typically, community-serving organizations are focused on providing services to the community in general, either globally or locally: organizations delivering human services programs or projects, aid and development programs, medical research, education and health services, and so on. It could be argued many nonprofits sit across both camps, at least in terms of the impact they make. For example, the grassroots support group that provides a lifeline to those with a particular condition or disease could be deemed to be serving both its members (by directly supporting them) and the broader community (through the provision of a helping service for fellow citizens).

Many NPOs use the model of a double bottom line in that furthering their cause is more important than making a profit, though both are needed to ensure the organization’s sustainability.

Although NPOs are permitted to generate surplus revenues, they must be retained by the organization for its self-preservation, expansion, or plans. NPOs have controlling members or a board of directors. Many have paid staff including management, whereas others employ unpaid volunteers and even executives who work with or without compensation (occasionally nominal).

In some countries, where there is a token fee, in general it is used to meet legal requirements for establishing a contract between the executive and the organization.

Designation as a nonprofit does not mean that the organization does not intend to make a profit, but rather that the organization has no ‘owners’ and that the funds realized in the operation of the organization will not be used to benefit any owners. The extent to which an NPO can generate surplus revenues may be constrained or use of surplus revenues may be restricted.

Now that we have covered the definition of a nonprofit let us discuss the relevant questions in an effort to better understand the issue.

1. At 465 plus registered nonprofits in this county, there are almost a limitless number of causes to be supported in this area and the number appears to be growing annually, why?

2. As explained above the advantages are many, but are they always beneficial to the area economics they reside?

3. What common types are there and do they accomplish what you would expect for the tax advantages they receive?

4. Do they request public grants or monies to carry on their efforts and who accounts for their results?

5. Do some have little or no positive history causing them to survive solely for the benefit of their executive director?

6. Does anybody question the outcomes of the public money spent in the name of a nonprofit cause, for example, “economic development?”

7. What burdens get placed on the people of the community to carry the cost of their existence in the community?

8. Do the people realize the nonprofits that hold real estate pay no property tax?

9. Although they are called nonprofit enterprises does the public understand their executive directors and directors along with employees can be paid and paid well? Please refer to 990 form examples of local nonprofits.

10. Is it fair that a local bank pays both property tax and corporate income taxes while a co-op credit union does not? How about a nonprofit co-op electric company competing with a private company like Allete, Xcel Energy or Duke Energy? A little closer to home how about co-op Paul Bunyan Communications as competitor to Mediacom Corp? What about the local medical facilities some with nonprofit status and some without?

11. What about private nonprofit economic development companies reaching out for public money, who owns the properties they buy or are given from public coffers?.

12. The question “is there real value to these nonprofits or are they just a tax advantaged entity sucking the life blood out of the community?”

Lastly we will be looking at how to acquire a 990 tax form, from a nonprofit, what’s in it and your rights to request it.