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Hubbard County will consider sales tax

If Hubbard County passes a special sales tax, paving County Road 81 is on a list of projects earmarked.

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 imposed on the second and third quarters of the year would fall 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 board earlier 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 crunched by 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.

It would be used for county road projects “to help out the local taxes, the local dollars that we spend on county roads. That’s the projects we’d be looking at possibly to fund,” he added.

The ultimate 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.

The way the new law is written, county boards have the final say.

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 theory and 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. We cannot increase his levy,” Dotta said.

The County 81 project is Exhibit A.

“I’m not saying we were committed to increasing their levy but we were seriously considering and when the legislature gave us the authority with the sales tax we looked at it and said, ‘if we levy it 100 percent of that money comes from the property owners of Hubbard County because it would be through property taxes,” 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 so once we explain everything to most people, if you go up to the average Joe on the street and say hi and ask about an sales tax increase in your local community most say no.”

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.

“But after I explain how we arrived at the decision to tentatively move forward pursuing this… most people would agree,” Dotta related of his talks.

“If you are really, really, really going to pave 81 four miles and it’s not a state aid highway and the money has to come from the county and you’re telling me you’re were gonna do it next year so it’s either put it on the tax roll or collect sales tax…”

“Everyone knows our population doubles and triples in the summer. There’s a lot of people with out-of-town mailing addresses that spend a lot of money here in the summer.” he said.

“And we looked at what our neighbors are charging. Every single neighbor has 6 7/8 sales tax and is it gonna drive business out of town? Taxes are 8 percent or more in Bemidji. Everyone that comes up from the Cities and those metro taxes are 8 (percent) or more; Walker I think is over 7 (percent) so these are just things we thought of and looking at all the things that would encourage us to implement it, it seemed the better way to go.”

There are logistical issues with turning on a sales tax tap and turning if off six months later, some merchants worry.

County board members understand that bookkeeping hassles could be a by-product.

At a September county board meeting, chair Cal Johannsen wondered if it would be more efficient to implement the tax for a year or two, then let it expire.

But recently the board seemed to hone in on the six months option.

Sarah Smith

Sarah Smith is the outdoors editor. She covers courts, business and breaking news in addition to outdoors events.

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