Carver County finance update: preliminary $4.4M gap, rising 2027 risks and options for addressing levy pressure

Carver County officials presented a detailed 2026 budget and finance briefing on June 24 that identified a preliminary gap under current assumptions, legislative and program risk factors for 2027, and a menu of options the board can use during the summer budget process.

County Administrator Hemsey and Property Finance Director Dave Frishman said the board—s fiscal outlook is shaped by several large variables. Hemsey emphasized that recent legislative action produced smaller cost shifts than originally feared but warned of significant risks looming in 2027. He cited the Minnesota paid family medical leave premium (county share estimated in the presentation at about $400,000) and other potential state policy changes that could shift costs to counties. Hemsey also said one placement the county funds in another county accounts for a majority of a roughly $1 million HHS cost impact cited in the briefing.

Frishman reported two favorable developments: preliminary fiscal‑disparities and County Program Aid (CPA) figures are stronger than expected and together added roughly $800,000 in preliminary revenue for the county. He cautioned these numbers are preliminary and will be updated with August data.

Key budget figures presented (preliminary): a 6.8% "pattern" levy increase (matching the last two years) would generate about $5.1 million; projected salary and benefit increases for 2026 are shown at about $5.7 million (driven in part by settled union contracts and overtime pressures); requested new levy‑funded positions total roughly $2.7 million net after other funding sources; and the preliminary budget gap under the presentation—s assumptions is approximately $4.4 million.

Frishman also illustrated a no‑other‑changes scenario that would close the gap with a 12.7% levy increase (an illustrative number in the briefing) and noted the county will update levy impacts after the August fiscal‑disparities and valuation updates.

Finance details and accounting context: staff described a roughly $3.9 million unaudited addition to year‑end savings for 2024 (driven by budget‑to‑actual variances and investment mark‑to‑market gains) and explained how vacancy savings are treated in the budget (vacancy savings reduce the levy requirement up front but actual vacancy experience affects year‑end fund balance). Frishman walked commissioners through historical vacancy‑savings trends and recommended monitoring and maintaining the county—s base budget discipline to prepare for 2027.

Next steps and board direction: staff scheduled budget hearings in July, a staffing‑focused work session in early August, and the administrator—s recommended budget appearance later in August, with a preliminary levy adoption planned for September. Hemsey urged commissioners to consider a mix of tools: base‑level discipline, targeted reductions, levy‑savings targets, revenue opportunities, equipment life‑cycle management, voluntary furlough or retirement incentives, and careful use of 1‑time funds. He emphasized the need to balance near‑term budget fixes with long‑term stability to avoid repeating disruptive one‑time fixes.