Carver County finance staff warn of state cost shifts as board reviews 2026 budget adjustments

Carver County officials on Wednesday outlined the county's third-quarter financial picture and urged the board to prepare for several state-imposed cost shifts that will affect budgets through 2028.

David Frishman, the county's part-time finance director, told commissioners the county remains broadly on track through the third quarter: investment income is positive, placement budgets that can be costly are holding steady, and property tax collections stand at about 97 percent of expectations. He warned, however, that Public Works will show a temporary negative cash balance at year end because the county fronts costs on large road projects and then waits for reimbursements from partners such as MnDOT and cities.

Frishman proposed two changes to the administrator's recommended 2026 budget that staff will include in the package returning to the board on Dec. 2. First, he recommended adding $40,000 in levy savings from voluntary payroll reductions to the employee relations STOC, a short-term staffing pool intended to backfill absences created in part by the new Minnesota Paid Family Leave law. Staff said the $40,000 is an increase on a previously budgeted $50,000 placeholder, reflecting actual open-enrollment savings.

Second, Frishman said staff identified additional ready-to-build projects in parks and road resurfacing and plans to increase the capital project budgets using Transportation Active Account (TAA) funds, some grant dollars and city cost shares; those changes would not affect the levy.

The county stressed a larger fiscal challenge: staff estimate roughly $6.1 million in legislative impacts across 2026'028, including about $900,000 for a state'defined "does not meet criteria" cost shift and a projected roughly $3.4 million impact tied to a new child-protection statute. To partially offset those changes, the administrator is recommending a 2% levy surcharge across the next three years that would raise about $4.8 million but leave a near-term gap of roughly $1.3 million.

Commissioners pressed staff for more detail and suggested additional work to examine timing, lease options for relocating staff during construction projects and potential trade-offs for the levy. Frishman said staff will present final resolutions at next week's board meeting and that the board will have opportunities to adjust or pause before any physical work begins.