MICA reviews 2025 legislative outcomes; counties spared major program aid cuts but face future shortfalls

Nathan Jessen, executive director of the Minnesota Intercounty Association (MICA), told the Washington County Board of Commissioners on June 24 that the 2025 legislative session produced mixed results for counties but avoided the deepest cuts MICA had expected.

“One of the values that MICA provides … is that we can be quick and responsive on some issues,” Jessen said, describing MICA’s role in representing larger counties at the Capitol and amplifying county testimony during negotiations.

The takeaway: counties avoided proposed cuts to county program aid and payments in lieu of taxes (PILT) but lost some anticipated new revenue and face delayed reductions that will affect later budgets.

Why it matters: County program aid (CPA) and PILT are recurring revenue streams used in county budgets. Washington County officials said avoiding immediate cuts preserved a short-term budget baseline but left unanswered questions about future state shortfalls and local cost shifts.

What MICA told the commissioners

- Taxes and local aids: Jessen and MICA staff said the final tax agreement repealed the local government cannabis aid that had been projected at about $23.7 million for the current biennium and $41 million for the next. MICA noted Washington County had not yet received cannabis retail revenue because no retailers were operating in the county, so the repeal removed a potential future source rather than an existing appropriation.

- Cuts avoided: MICA highlighted that, amid wide concern about a multibillion-dollar out‑biennium deficit, the session did not cut county program aid or PILT — both had been targeted for steep reductions earlier in the process. Jessen said Washington County receives roughly $635,000 a year in PILT.

- Aquatic invasive species (AIS) aid: MICA reported a reduction in AIS aid that will take effect for aids payable in 2027; for Washington County the AIS reduction was described as roughly $140,000 a year.

- Sales tax exemptions and data centers: MICA staff said a long‑standing county priority — a functional statewide sales tax exemption on construction materials for county projects — saw no movement this year because of budget constraints (staff cited an estimated statewide cost over $60 million a year). The Legislature also removed an electricity sales tax exemption for data centers and added several narrow…