Hennepin County officials on Jan. 13 urged residents and fellow elected leaders to prepare for the possibility that federal and state fiscal changes could significantly squeeze local services and property-tax policy.

Joe Matthews, the county's chief financial officer, presented a high-level review of the adopted $3,150,000,000 2026 budget and said three areas will strain county finances: health-care costs, state and federal cost shifts, and the cost of delivering mandated services. "We have a $3,150,000,000 budget," Matthews said, explaining that property taxes account for about a third of the total while combined federal and state patient-care and grant funding make up a larger share of operational funding.

Matthews detailed already-quantified federal impacts, including an $8 million reduction in SNAP administrative revenue tied to recent federal action, a FEMA shelter grant payment that was roughly $2.7 million less than expected, and other grant reductions. He also said 79 grants totaling $173 million are currently protected by legal actions, with $62 million reflected in the 2026 budget. "That would be about a 6% increase in the property tax levy if you were to dollar-for-dollar replace those funds back," Matthews said, urging caution about relying on property taxes as a backstop.

Commissioners used the presentation as a chance to press for clearer, dated updates about exposure and likely impacts. Commissioner Green praised the conservative accounting of only what is known but warned Medicaid changes may be "an order of magnitude" larger than the items currently quantified. "The potential exposures [are] orders of magnitude larger than what we're listing," Matthews agreed, adding that Medicaid is complex and braided across state, local and federal funding streams.

County leaders described near-term management strategies that will aim to protect core programs while seeking savings: continued vacancy reviews, targeted position eliminations adopted in the 2026 budget (249 positions removed through attrition), voluntary unpaid-leave offers that yielded about $2 million last year, fee reviews and operational realignments. Matthews said staff will explore limited opportunities to maximize existing state and federal revenues under current statutes but cautioned new revenue will not be easy to obtain.

Board members asked for periodic public reports with dates so residents can track evolving risks. The county committed to bi-monthly updates and a follow-up report to the board in March. "As we move ahead...we'll be bringing you specific updates on our year-to-date budget and other financial metrics," Matthews said.

The presentation did not include a formal vote; commissioners thanked administration and directed staff to return with additional, dated analyses and continued monitoring as federal and state processes unfold.

What's next: the county plans regular updates through the spring and summer budget process, and administration said it will report back to the board in March with further details and any new quantified impacts.