No perfect road; Rural residents want county to keep half-cent sales tax, but business leaders say it will hurt
Published 7:32 am Wednesday, June 28, 2017
Most attending Tuesday’s Mower County board meeting agreed: Mower County’s roads and bridges are in dire need of repairs.
The problem comes with how to pay for them.
As the board took public comments on a plan to keep or rescind a half-cent local option sales tax for roads and bridges set to start Jan. 1, 2018, Austin Area Chamber of Commerce Director Sandy Forstner argued the option would be detrimental to an already taxed business community.
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“This tax would hurt our local retailers,” he said, adding it would especially hit Main Street businesses — and their customers — in Austin and rural communities.
But several rural residents argued Mower’s roads are deteriorating to the point of becoming unsafe as they urged the board to take action.
“The roads are not in very good condition at all,” rural resident Jim Kellogg said.
Another resident said it’s only a matter of time until someone, like a motorcyclist, is hurt hitting a pothole.
“We need something done,” she said. “They need to get fixed.”
The county reopened discussions recently on implementing the half-cent local sales tax to fund road and bridge construction to help meet an estimated $6 million a year shortfall for road and bridge funding.
The board passed the tax last year and it’s scheduled to fuel another $1.5 million a year for construction starting in 2018. But the board approved it last year with the intention of pressing the Legislature for more funding.
It got some — but not much. The 2017 Omnibus Transportation Bill is giving the county an additional $229,940 in 2018, $247,865 in 2019, $569,032 in 2020 and $574,990 in 2021, but Public Works Director Mike Hanson warned the 2020 and 2021 funds aren’t guaranteed since they’ll be on a new state budget. Plus, 40 percent of each year’s funding must go to maintenance, meaning the county would only get $137,964 for construction next year and $148.719 in 2019.
That’s not much In infrastructure terms considering an average mile of cold inplace road resurfacing costs $325,000, according to Hanson.
“That money isn’t going to get us anywhere,” he said.
The Legislature also passed $48 million in bridge bonding dollars, but $31 million is earmarked for the Twin Cities, and Hanson doesn’t expect Mower to secure funds, though he plans to try.
With a bit more state money, Hanson outlined a plan Tuesday that increased annual construction dollars from about $3.9 million to $5.8 million.
The half-cent sales tax’s $1.5 million would only be a part. Additionally, the board could increase the wheelage tax from $10 to $20 for an additional $370,000, it already dedicated $400,000 a year in wind production tax revenue, $60,000 from an aggregate tax, $137,964 in additional legislative funds and about $3.3 million would come from basic construction allotments.
“All would be used for construction projects, which would close the gap,” Hanson said.
To date, 52 counties, including Mower, have the wheelage tax and 30 have the half-cent sales tax. But most nearby counties have already implemented the half-cent sales, as Hanson said seven of the 11 counties in Mower’s Minnesota Department of Transportation District 6 have the tax in place, and nine have the wheelage tax.
‘Your options aren’t great’
Forstner, speaking on behalf of the chamber’s members, and Donker’s Hometown Appliance owner Ralph Donkers spoke out in strong opposition to the half-cent sales tax, arguing it would raise Austin’s current 7.37 cent sales tax — of that, 6.875 cents is a state sales tax and the remaining half-cent is levied by the city — to near 8 percent, which would push customers away from local businesses toward internet shopping.
“I don’t think a local option sales tax is the right way to go,” Forstner said.
But Forstner acknowledged the need for road repairs and that the board doesn’t have many other routes.
“Your options aren’t great,” he said.
The Austin and Minnesota chambers also pressed the Legislature for funding, even changing course to support a gas tax increase. However, Forstner argued business owners can’t incur another tax and shoulder the burden.
He said Mower County’s retail is not strong, as he referenced data that shows the county loses about 37 percent of expected retail to other counties and the internet.
“We’ve got a problem,” he said.
An additional tax, he said, would hit small business owners and their customers the hardest. Donkers agreed.
“We’re pushing customers away from our retail establishments,” Donkers said.
Donkers has also seen more shoppers turning to the internet, where taxes are less of a concern.
But one woman argued internet shopping is more generationally driven than tax driven, and some at the meeting argued most shoppers don’t stop to consider sales tax when making purchases.
Despite the chamber’s views, several rural residents urged the board to take action.
Southland School District Transportation Coordinator Jenny Ellefson said, “Right now, I’m not feeling completely safe on all out county roads.”
She added the rough roads take a toll buses and other vehicles, and resulting in more maintenance.
Austin Township Chairman Dennis Bray said someone has to pay for the fixes.
“We all agree something has to be done,” he said.
Other rural residents argued they’re less likely to drive to Austin to shop at businesses if they deem the roads rough and unsafe.
The county could also increase the tax levy 7.5 percent to raise the $1.5 million of the half-cent sales tax, but Forstner said that would not be preferable option.
The board took no action Tuesday and is set to next discuss the issue, and potentially vote, during its regular meeting at 2 p.m. July 11.
The board has shown mixed opinions. Commissioner Jerry Reinartz voiced opinions similar to those of the chamber and has argued the funding should come from the state. He and Commissioner Tim Gabrielsson have argued the state used the half-cent sales tax option to pass road funding to the counties.
However, Gabrielson said Tuesday the board has no other options and should have passed the tax three years ago.
“This half-cent sales tax, is it the perfect way to go? No. But it’s one of the best options we’ve got,” he said.