'Huge' proposed tax increase for Cloquet Area Fire District concerns residents

Attendees of the Cloquet Area Fire District’s truth in taxation meeting Thursday, Dec. 9, were bustling and speaking amongst themselves before the meeting began. Over 20 people were in the room waiting with documents, tax slips and talking to their neighbors about taxes in the towns where they live.

A theme was clear: The majority in attendance were from Thomson Township or areas like Culver, which only receive emergency medical services from the CAFD, and are getting hit with higher tax bills. A good portion of those in attendance were representatives from the Thomson Township Board of Supervisors, the Esko School Board and the Carlton County Board of Commissioners.

Legislation from earlier this year allowed the CAFD to remove the 0.019% cap on its EMS-only tax levy. The board chose to go with a phased approach to get to a proposed levy of 0.132% in 2023, with 2022 leaving 50% of the levy on the fire portion. The board went with the phased approach to mitigate the shock some residents may have to a full levy increase in one year.

Some residents from Esko and Culver saw 322% increases on their tax slips.

While the CAFD tax levies have not yet been certified, board chairperson Bob DeCaigny advised attendees that the levies will come in below what was sent out on the tax statements.

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Jeanne Vogt of Ehlers, public finance advisors for CAFD, gave a presentation to open the meeting that described how the burden of cost had previously been on those with both fire and EMS services and how costs will be allocated as they really are.
According to the presentation, $876,000 is projected to be removed from the tax base with both fire and EMS services, and shifted to those with just EMS services.

The reasoning behind the large increase is the ambulance service makes up about 80% of the calls for the district and 75% of the costs. Vogt explained that since 2009, the cap on the EMS levy shifted the cost for EMS services onto communities that receive both fire and EMS.

The district will now be able to allocate the cost of services to all of the communities it serves.

Vogt said the district has worked to lower the total taxes residents would have to pay since adopting a preliminary levy in September.

Documents provided by CAFD show the breakdown of taxes for those in the district with EMS-only and those with both.

For a median home, worth $200,000, residents who live in an area with combined coverage would see their taxes decrease from $437.45 to $414.49, a drop of $22.96.

The same priced home for residents in an area with EMS only would see its taxes increase from $44.98 to $125.70, a hike of $80.72.

Vogt said residents can assume the same increase in the next year as it is the best information available now, but it could change depending on the district budget and market values.

The levy increase to those in EMS-only areas was the reason why many community members were present at the meeting.

Ted Klein, of Culver, said his tax bill will go up over 300% next year and wanted to know why it increased so much when the ambulance service collects revenue from insurance providers.

“Why is it being dumped on the individual landowner?" he asked. "We probably never use it."

Vogt said what property owners are paying for could be thought of in the similar vein as insurance.

“You may not need it, you may not ever need it, you may not ever have a claim, but if you do need them and call them they are there,” she said.

In terms of the ambulance revenues from insurance providers, Vogt said the levy fills the gap between ambulance revenues and expenses. For people over the age of 65, there is also a cap on how much they can be charged for an ambulance ride.

Klein also brought up the fact Culver mainly received calls for residents in nursing homes and had many fewer calls when compared to Cloquet or Thomson Township.

Vogt said the levy is not decided on the volume of calls, but purely on property tax values. This means despite having lower calls in Culver, residents will be paying the same property tax rate as everyone else who in an EMS-only service area.

Jim Nynas, a resident from Esko, said he had been having a hard time with the proposed increase in the levy and is concerned about the direction the fire district is taking.

“I look at my proposed tax statement, and I see an increase of 322% — that is a huge increase,” he said. “I do not know of any governmental body that has ever passed on a levy increase of that nature.”

Nynas has no concerns about the level of service the CAFD provides, but said he is concerned about the way the finances are going.

“I would hate to see the actions of this group have a negative effect on the services that we’re all currently experiencing,” he said. “That is what I’m afraid is going to happen.”

Vogt responded to Nynas saying the district has worked diligently to lower the rates as much as possible.

“Almost $300,000 from the time in which your tax statement was printed,” she said. “So we are not looking at those increases on your final tax statement.”

Jason Paulson and Tony Compo, members of the Thomson Township Board Supervisors, voiced their concerns about the proposed levy.

The township made a resolution of non-support at its Dec. 6 against the proposed levy.

Paulson said the township pays Carlton County $3,000 per year for basic life support services, which is a lesser form of service compared to CAFD’s advanced life support.

Compo brought some rough estimates on how much the township would pay in taxes to the district with the proposed levies, and the amount increased from $92,000 in 2021 to $407,000 in 2022.

Vogt and DeCaigny added the estimates run by the township used the higher proposed levy, while the finalized one is likely to “change slightly.”

Paulson had been on the CAFD board until his resignation in October due to the proposed tax increase. He said he was disappointed that people who do not live in Thomson Township voted to increase residents' taxes.

“Essentially taxation without representation,” he said.

Paulson and Compo brought up the idea of the township leaving the CAFD’s primary service area and either starting its own EMS service or finding a cheaper alternative. Currently the township is in both the CAFD’s service area and Carlton County’s ambulance service area.

The primary service areas are set up by the state's Emergency Medical Services Regulatory Board, and it is not a simple task to change areas, officials said.

After some back and forth among the township supervisors and the CAFD board, DeCaigny shut down the discussion and said the truth in the taxation meeting is purely for discussion over the proposed levy.

“If you guys want to have these discussions, then I recommend that you get time at a regular board meeting,” he said. "R eality of the matter is from the district’s inception in 2009 to now this next year, you’ve been getting a bargain.”

Mark Nyholm, a resident from Esko, asked the board about the new full-time employees being hired next year and if the district is understaffed currently.

“Part of this is you are putting a big tax burden on us, you’re also not helping yourself by adding four more staff if you may or may not need them,” he said.

Battalion Chief Jesse Buhs said with a new delivery model, which the district adopted earlier this year, the new employees will be needed to fulfill the model.

“The purpose for hiring the staff is to support the delivery model we have adopted as a board and organization,” he said. “The delivery model is to meet the service commands of the communities we serve.”

Nyholm said while he understood those paying for both services had taken on more of the burden, the district had a public perception problem, especially with residents of Cloquet and Scanlon seeing their taxes decrease.

“If that got out to everybody else’s property that went up … you’d have 1,000 people standing outside picketing,” he said. “Don’t let that information out.”

Carlton County Commissioner Marv Bodie asked two questions to the board and did not receive an immediate answer on either. He asked if they would consider this ambulance rate model the most expensive in northeastern Minnesota and if residents of Thomson Township would be able to vote on a bond referendum for a new building.

The board did not know of any study comparing rates from other services in the area.

The referendum question stemmed from the district planning to build a $21 million fire station included in its capital improvement plan. DeCaigny said the district is looking for some legislative funding for the project, as well.

Eric Rish, a former board member, said attendees should have been present at meetings in September to be more involved in the process.

“I am afraid the dam is open … I can hear it atone that they believe they have done their due diligence in reducing the levy,” he said. “I would implore that they do whatever they can between now and (Dec. 15) to take one last look at this.”

The board is expected to vote on the proposed levy during its meeting Dec. 15, as the levy needs to be certified by Dec. 28.