Wright County eyes sales tax option for roads, bridges

Managing Editor

Money would fund road and bridge projects, including some in Otsego, but proposal is expected to raise eyebrows

by John Holler and Jim Boyle

The Otsego City Council was briefed Monday, March 13, on an issue that is sure raise eyebrows in the coming weeks.

They were told the Wright County Board was planning to set a public hearing about a proposal under consideration to impose a half-cent sales to cover road and bridge projects.

The briefing certainly had the attention of Council Member Tom Darkenwald, who expressed reservations.

The hearing will be open to the public, and Otsego Council members joked Darkenwald would be in attendance.

Interim Administrator Adam Flaherty said at this point he was only passing the information along and more updates would be coming.

Council members talked about pros, cons and how the sales tax would work. Reaction seemed mixed. Flaherty did note if the City Council became adamant, members could pass a resolution.

History
Wright County has looked to avoid adding on a tax, but, with the state of Minnesota holding the line on state aid funding for road and bridge projects, it has allowed counties to impose their own sales taxes, most of which have added a half-cent tax.

The state sales tax is currently at 6.875 percent in counties like Wright and Sherburne that have not added a sales tax. County officials are looking to raise tax in their county to 7.375 percent.

Commissioner Darek Vetsch was quoted in the Monticello Times, a sister publication of the Star News, that he was looking forward to the opportunity for the discussion to get public input because he expects that, once explained, more residents would favor a sales tax as opposed to the alternative – raising the needed road and bridge money through property tax levy increases.

“I just want to get transparency on this with the public because we need public input,” Vetsch said. “I want to get the pros and cons out there so people know why we’re looking at it. The state isn’t giving us any additional money for road projects and has said this is your way to generate your own funds and allocate the money for road projects. We’ve been left to do a sales tax, make additions to the levy or not doing projects.”

Officials have said doing nothing isn’t a realistic option and the need continues to grow. Commissioner Mike Potter estimated that Wright County needs $12 million a year simply to maintain its current road system, much less making improvements to the road and bridge system. The county is getting approximately $6 million a year in state aid funding, which barely covers half the county’s annual cost.

Funds from the proposed local option sales tax would be earmarked exclusively for road and bridge projects – of which there are several waiting in the wings.

“Statutorily, that half-cent tax collected could only be used for road and bridge projects,” Potter said. “We’ve identified $78 million in projects that are on the shelf going out in the future that could be used with this money. We’re going with a conservative number saying that we would generate between $5 million to $6 million a year.”

Of the $78 million in projects, four are in Otsego. There are others in nearby communities such as St. Michael and Albertville.

The advantage to imposing a local half-cent sales tax, Potter theorized, is that given its proximity to the Twin Cities, many of the people who would be purchasing items subject to sales tax would be from outside the county – a figure he believes would be significant.

“The data I’ve seen discussed is that between 30 and 50 percent of the tax that would be collected would be derived from people who don’t live in Wright County,” Potter said. “If we just raised property taxes in the county, it would all be on our residents. To me, the question is do we want to pay 100 percent of the taxes to get road projects done or have other people from outside the county share in that cost?”

Twenty-six counties have added the tax
Wright County would be far from alone if a local option sales tax were approved. A total of 26 counties already have a county-based tax in place, including 14 that have signed up since Jan. 1, 2016. Three years ago when the state capped funding for counties to fund road projects, counties were legislatively given the option of raising their own funds. Potter said

Wright County has spent all of its resources simply to keep up with needed repairs and maintenance of the system and that the sales tax is their only realistic option to making headway on keeping the county’s road system ahead of needed repairs.

“We’ve been Band-Aiding projects for years just to try to keep up,” Potter said. “But it’s not getting us ahead and there’s no expansion money at all. We have to maintain our roads and we’re running out of options.”

While nobody wants to see tax increases, Vetsch said, the local sales tax option is the most viable out there and he expects to see opposition, perhaps even some significant opposition.

“I think it is going to be controversial,” Vetsch said. “That’s why I want to go the public. I want as much public input and transparency as possible. I could go both ways on it. I want great roads, but I’m also a strong advocate for reasonable taxes. I just don’t feel adding to property taxes is fair. This is much fairer in terms to how it is spread out.”