After hearing from county officials and the public at a hearing Dec. 1, Cass County commissioners unanimously adopted a half cent sales tax to support transportation needs.
The hearing began with a review of how revenue raised would be used for pavement preservation, transition of gravel/chloride roads to pavement and potentially property tax relief.
The reason behind the local option sales tax is that for years, the County State Aid Highway (CSAH) system has been underfunded. Gas tax revenue is supposed to support CSAHs, but the state Legislature has not raised the tax in years; plus, cars have gotten more fuel-efficient. For many years, Cass has used local tax revenue to make up for the shortfall in state aid to the CSAH system.
Several years ago the Legislature allowed counties to levy a local sales tax to support transportation, but did not raise the gas tax.
Before making a decision, the Board contracted with the University of Minnesota Extension Service to do an analysis of how much the local option sales tax would raise annually. The report showed $1 million annually to be a reasonable estimate, with 20-30 percent paid by county residents (about $7 to $10.50 per resident per year) and the rest by non-residents. Even if purchases by locals are underestimated, the U of M felt the maximum cost would be about $14 per resident per year.
In a letter the SWCD endorsed the concept, recognizing the growing shortfall of state funds for county road improvement and the lack of action by the Legislature. SWCD noted that 17 counties have already enacted the option and that Cass is an “island” surrounded by them.
SWCD added that improved highway infrastructure would reduce soil erosion losses and sedimentation to surface waters and also reduce chloride, phosphorus and other nutrient pollution in lakes and streams.
Greg Ravenhorst of Walker Pipe and Supply presented a business owner’s perspective. Saying that he was neither for nor against the tax, Ravenhorst described the burden placed on a small business like his, which delivers products to several other counties and cities that have a local sales tax. He must collect the local taxes, send them to the state along with the state tax, and report each entity’s tax separately, creating a bookkeeper’s nightmare. He said the Legislature took the easy way out by not addressing the problem itself and instead offered counties the local option.
Sylvan Township supervisor John Wulff, also a small business owner, agreed with Ravenhorst’s remarks. While stressing that he, too, understood the need, he said it was too bad that the burden falls on small business owners.
In Cass County, the half-cent sales tax will run 10 years, will be evaluated annually and can be revoked when no longer needed.
On a motion by Dick Downham, seconded by Bob Kangas, the board unanimously adopted the half cent sales tax to start April 1, 2016. Between now and April 1, the state will set up programming and notify businesses. Five counties across the state are scheduled to consider the local option this month.
County Administrator Bob Yochum said Cass should see its first receipts in the second quarter of 2016. The plan is to collect the money, set it aside and see what the pattern of revenue is before taking action on transportation program elements.
Earlier, the board discussed the 2016 budget and levy and heard from county, township and Soil and Water Conservation District (SWCD) officials and other taxpayers.
Staff reviewed the 2016 budget proposed for adoption Dec. 15. The preliminary levy of $21,475,633 set last September has been reduced by $446,607, leaving a final recommended levy of $21,029,026, a 4.19 percent change from 2015.
One of several Citizen Budget Committee recommendations to lower the preliminary levy was to eliminate $7,250 in support for SWCD. That decision was based on news that SWCD’s base funding from the Board of Water and Soil Resources (BWSR) for fiscal years 2016 and 2017 will increase from $18,000 to around $100,000.
SWCD Chair Jim Ballenthin and Supervisor Ken Laporte asked the board to restore the cut. Ballenthin explained that BWSR wants SWCDs to use the new money for new activities and that new funding is not intended to supplant or replace existing funding. He distributed information from BWSR to support his statements, which was not available when the Citizen Budget Committee made its recommendation.
The board agreed to consider the new information prior to approving and adopting the final budget and levy.
Several township officials, including Reno Wells, chair of the Cass County Association of Townships, Yvette Dullinger of Sylvan and John Benson of Moose Lake townships, thanked the board for considering the budget committee recommendation to discontinue billing townships $38,000 for general election expenses.