County considers sales tax option
Becker County is coming up as much as $800,000 a year short in its long term highway construction spending, and commissioners are looking at several tax and bonding options to solve the problem.
The new tax option that seems to have the most support on the county board is a local option sales tax of up to half a cent.
In Becker County, a half-cent sales tax would raise up to $1.9 million, according to the Association of Minnesota Counties, though other estimates put the amount at closer to $1.4 million.
A second tax option is the “wheelage tax,” which comes from tacking an extra $10 on license plate tab renewals.
The wheelage tax would raise about $314,000 in Becker County, but appears to have less support on the county board.
Becker County has 677 miles of roadway, with 448 of those miles paved.
Those roads are currently resurfaced or rebuilt on a five-year plan, through funding that includes $2.7 million in state aid, $600,000 from the county tax levy and about $200,000 in federal funds.
Highway Engineer Jim Olson said road construction is getting more expensive and the county is falling behind on road needs.
“In 2003, we were paying $73,000 a mile (for resurfacing work), now we’re paying $171,000 per mile,” he said, an increase “which is significant.”
The county needs about $3.5 million a year to keep up with highway resurfacing and reconstruction work.
“We’re about $100,000 a year short on that,” Olson said.
There are also stretches of highway that are getting past the point of resurfacing and will have to be rebuilt, a much more expensive job, as well as bridges that need to be replaced.
Commissioner Larry Knutson pointed out that a certain amount of rebuilding is always needed regardless, because of too-narrow roadways and aging culverts.
Olson agreed, but said more money is needed for county highways. “We are teetering right on the edge of the curve, where if we delay work it will cost significantly more,” he said.
The county also plans to build a new highway department facility, likely in conjunction with the city of Detroit Lakes, and that will have to be paid for as well.
If the county floats bonds to pay for that project, the bonds will be paid back via the property tax levy, said Commissioner Barry Nelson.
“I would rather see a wheelage tax pay for a public works building as opposed to bonding for it and paying for it through the levy,” he said.
Earlier in the meeting, commissioners Ben Grimsley and Larry Knutson came out in opposition to the wheelage tax, arguing that it is a poor way to pay for roads, since it leaves out some major players that use the highways, like agricultural vehicles and out-of-county vehicles.
Board Chairman Don Skarie said the Aug. 1 deadline to impose a county wheelage tax didn’t give him enough time to thoroughly look into the option, though it might be something to consider next year.
But there was more interest in a sales tax, which has no deadline.
“Not that I’ve been thinking about it,” joked Knutson, but an eighth-cent increase in the sales tax would raise $350,000 to $475,000 a year, and that would come from everybody who uses the roads, whether they are residents or visitors, he said.
Commissioner John Okeson also favored a sales tax over a wheelage tax.
“The wheelage tax is a small bandage for a big problem,” he said. “You have to think long-term. I’d rather see a small sales tax versus raising the levy — at least people visiting the county are paying for some of the infrastructure.”
Nelson said he would like to see a public meeting held during the next commissioner’s meeting in two weeks to allow for feedback. It would also give the county time to research both taxes, as well as current bond rates.
If the board goes for the full half-cent sales tax, the county could eliminate its $600,000 property tax levy for highways, Nelson noted.
Grimsley pointed out that the state will collect administration fees on certain new taxes, and the county should find out the details prior to making a decision.
No one disagreed, but a long term solution needs to be found, Nelson said.
“We are moving backwards on the condition of our roads,” he added.
Knutson agreed. “We have put more money into our roads the last two years, but I think we have to do more,” he said.
The board took no immediate action, but opted to revisit the issue at its next meeting.