Property owners in St. Louis County could be in for some sticker shock when tax statements come out later this year.
As soon as this week, county board members could establish a preliminary property tax levy for 2026, and Ely commissioner Paul Mc-Donald warned that a sizeable increase may be in store.
“It’s sort of a perfect storm,” said McDonald, during an appearance on The Ely Echo’s podcast, The Pulse of Ely.
McDonald didn’t project the size of the tax hike and indicated that commissioners and county staff are still working to pare down the number.
But McDonald conceded he was “aghast” at the starting number in county budget discussions, and pointed to several factors, particularly unfunded mandates from both the state and federal governments.
“There are a couple of things enacted by the state legislature that will trickle down to us,” said McDonald, who is in his second term on the board. “There are mandates by state statutes to run certain programs, from both the state of Minnesota and the federal government as well. Whether it be earned sick and safe time, paid family leave, some public safety issues with jails and jail staffing where we have to make some moves there to make sure nobody is ever alone. It all adds up.”
McDonald also cited federal SNAP (Supplemental Nutrition Assistance Program) benefits, where the county continues to provide the service as mandated, but with less assistance.
“We’re still administering a program with a whole lot less funding coming from both the state and federal,” said McDonald. “It’s not like we can say ‘we’re not going to do that anymore.’ It puts us in a precarious spot.”
Rising costs and contract negotiations also figure to play a role in driving up the cost of the county budget, and subsequently, the tax levy.
St. Louis County collected just over $180 million in property taxes in 2025, which amounted to a seven percent increase from 2024.
McDonald said “You’re going to unfortunately see a number that we’ll discuss in depth at our first meeting in September and pass a preliminary levy. Unfortunately, on a lot of this stuff, whether it be inflation or medical costs, we’re not in control of that. You put yourself in a tough spot there.
McDonald’s message to taxpayers was “Bear with us. We need your help on this. We’ve just got a lot of things that are changing right now, and unfortunately, we are mandated to do the programs, and the unfunded mandates are trickling down to us.”
McDonald addressed a bevy of other issues during the visit, among them his vast district, which includes 11 cities, 33 townships and more than 40 unorganized areas and is the largest geographical district in the state, spreading from north of Duluth to the Ely area.
“My district would be the largest county east of the Mississippi,” he said.
McDonald said he counts on a vast network of local officials and constituents to help keep him abreast of key issues.
“I have a network of people who aren’t afraid to call me, whether they agree with what we are doing, or they disagree,” said McDonald.
McDonald said he believed the county has made good progress on public infrastructure, including county roads, pointing to projects funded by the county’s transportation sales tax.
“Morse Township folks will be happy when we do the Winton Road and South White Iron Road and we’ve got some culvert replacements coming up on 88. We try to pick where we can help the most. You’ll see a lot of transportation sales tax signs in the area.”
McDonald also pointed to the county’s work on trails and an alliance with other northeastern Minnesota counties.
“There are some exciting things going on there,” said McDonald. “I think we’ve done some very positive work with the ATV Joint Powers Board, doing trail work and economic development. When you look at the University of Minnesota study there are 30 plus million dollars a year from this industry coming up to northern Minnesota. It’s an eye opener.”
The upcoming Ride and Rally event near Silver Bay will bring nearly 20 state legislators to get a first-hand look at area trails and see the economic impact.
The day of the interview, McDonald also spoke at the grand opening of the Ely Community Center, which got county help in replacing kitchen equipment.
“We cobbled together some money to get that kitchen up in the Community Center,” said McDonald. “Is it a lot? No, but it’s that gap funding right at the end to get something over the top. I think that’s the lane of county government.”
McDonald said the county is looking for public works employees to be housed in the Ely garage and hailed the efforts of staff, starting with administrator Kevin Gray.
“We are the envy of a lot of rural counties,” said McDonald. “We’re blessed to have the people we have.”
McDonald said he views his role to be “an advocate for your constituents. When I get a call I say “how can I help you?’ St. Louis County is built on good customer service.”
Representing an area that includes the Ely, Babbitt and Tower areas and extending to Aurora, Hoyt Lakes and Biwabik, McDonald estimated he puts 35,000 miles a year on county business.
“I’ve really enjoyed it,” said McDonald. “Some days I wonder what I got myself into, but that’s with anything.”
