Hubbard County considers temporary sales tax to help fund road projects
PARK RAPIDS, Minn. – Hubbard County is positioning itself to take advantage of a 2013 law passed by the Minnesota Legislature allowing political subdivisions to enact a temporary general sales tax.
The theory is that a tax during the second and third quarters of the year would be imposed during the height of the tourist season, when the county’s population grows exponentially and uses county and local roads.
Taxes would go toward county road projects that don’t have a state or federal match.
Public Works Director Dave Olsonawski brought the matter to the county board this fall.
The county could levy up to a half-cent sales tax under the 2013 law but impose increments of a quarter-cent.
According to figures from the Association of Minnesota Counties, a half-cent sales tax during two quarters would generate $500,000 a season.
“It’s legislation allowing the counties the options to do a wheelage tax or a sales tax,” Olsonawski said.
The decision to impose a tax and how much would be up to the county board. No public vote is needed.
Various commissioners have been visiting the business community to discuss the proposal.
The $500,000 “looks substantial,” Olsonawski said. “It depends on how much tax was collected.”
The board needs to identify projects for the funds to be used on, Olsonawski said.
“It has to be project-specific,” he said, including road projects or a building.
“We don’t know all the particulars yet,” he said. “We’re still trying to find out what they need for information to go ahead with this.”
One identified project is the paving of Hubbard County 81 from Park Rapids to Dorset.
The road received heavy use two years ago during the Highway 34 construction, even though it was not a designated detour.
Hubbard County Commissioner Matt Dotta has been making presentations to civic and business groups.
“I haven’t heard anything negative,” he said.
The board prefers not to raise any tax, he added. The philosophy behind it was for the past six or seven years “the board has frozen Olsonawski’s budget and he’s asked for more. Certain projects have been on board for a while, and the board keeps asking him to defer them a year, another year,” Dotta said.
“If we flatten the levy and keep it the same but use this alternate source, the sales tax … seasonally we get a huge influx of people from outside of this area who do what? They use our roads. So not only is it a way to diversify who actually pays the tax, but it actually lets the greater number of people who actually use our roads help fund them.”
Cynthia Jones chairs the Downtown Business Association, which hasn’t taken an official position on the proposal.
The DBA heard Dotta’s presentation a few weeks ago and disseminated the information. Jones said all questions should be directed to the commission.
Some merchants worry about logistical issues with turning on a sales tax tap and turning it off six months later.
County board members understand that bookkeeping hassles could be a byproduct.
At a September county board meeting, chair Cal Johannsen wondered whether it would be more efficient to implement the tax for a year or two, then let it expire.
But recently the board seemed to focus on the six-month option.