June 10, 2021 at 1:12 p.m.
Sales tax for road improvements approved
The unanimous vote followed public hearings on the new sales tax and on the 2016 proposed budget and levy.
The board will not vote on the final budget and levy until the Dec. 15 regular board meeting, which begins at 10 a.m. at the courthouse in Walker.
A growing number of counties have adopted the local transportation sales tax as state aid road funding has fallen behind county highway maintenance costs. The state gas tax primarily funds state highway aid.
State legislators and federal congressmen have failed in recent years to draft state or federal tax increases to cover rising road costs and declining tax receipts as drivers switch to electric cars or drive fewer miles and generate less gas tax.
Bituminous material costs have leveled off, but not dropped as oil prices declined, County Engineer David Enblom said. At the same time, gravel costs have escalated.
Instead of raising the state gas tax or offering another state funding source, the state legislators gave counties the option a few years ago to levy a local sales tax for roads.
At Tuesday's hearing, Greg Ravenhorst, owner of Walker Pipe and Supply, told the county board local option sales taxes have created a bookkeeping nightmare for small businesses.
He said he sells his products in a regional area. More and more cities and counties have taken advantage of local option sales taxes to fund not only transportation, but also sewer systems, parks and other special projects.
This means when he delivers his products, Ravenhorst must determine in which county and city or township the buyer's property is located. Then, he must look up whether that location has one or more local sales taxes. He has to collect the local as well as state sales tax from the buyer.
When he files and pays sales taxes to the state, he has to use a separate line item to pay each local jurisdiction's tax in addition to the state tax line.
County Board Chairman Neal Gaalswyk and Administrator Robert Yochum told him the board and county officials agree it makes more sense to have statewide taxes for statewide needs, but the state has failed to act, leaving the local tax the county's only option to preserve the quality of its roads.
Cass' new tax can be canceled by any future county board if the state does enact adequate road funding, Yochum noted. Cass' tax was enacted with a 10-year road resurfacing and new pavement schedule. That will be reviewed annually.
There are start-up and close-down costs, so it is not cost effective to go in and out of it every other year, Chief Financial Officer Larry Wolfe said.
John Wulff, Sylvan Township, said he understood the county's need to pay for road improvements, but he agreed with Ravenhorst that the local sales taxes have made collecting and paying sales tax difficult for business owners.
Jim Ballenthin, Cass County Soil and Water Conservation District, told the commissioners SWCD supports implementing the one-half cent sales tax.
"We believe an improved county highway infrastructure would serve to reduce soil erosion losses and sedimentation to surface waters as well as being able to reduce chloride, phosphorus and other nutrient pollution to our county lakes and streams," he said in a letter from SWCD.
"The benefits to our water based economy and environments would be more than offset by this small sales tax increase, in our board's opinion," Ballenthin said.
Enblom said he thinks it is easier for county officials to see the road needs as they pump their gas locally than it is for legislators and congressmen, who are spending more time in St. Paul or Washington, D.C. The farther they are away from the problem, the less they understand it, he said.
The board's resolution instructs the Minnesota Department of Revenue to implement the tax. The Revenue Department has 90 days to do so. Wolfe said Wednesday it is the county's hope to start the tax by April 1.
A University of Minnesota Extension report indicates Cass can expect non-residents to pay at least 70 to 80 percent of this transportation sales tax and local residents pay 20 to 30 percent.
The tax is expected to generate $1,072,131.51 revenue per year, with $72,131.51 of that being paid to the Revenue Department to administer the tax. Over the 10 years of Cass's road plan, the county expects to resurface 99.7 miles of existing paved roads and convert 26 miles of gravel to bituminous surfacing.
At the proposed 2016 budget and levy hearing, the commissioners presented the budget committee's recommendation to reduce the levy increase from 6.4 percent to 4.19 percent, largely by using some reserve funds in 2016.
The final levy would rise from $20,182,969 this year to $21,029,026 in 2016.
Reno Wells, Cass County Township Association chair, thanked the board for considering the budget committee's recommendation to eliminate the county's $38,000 charge to townships to administer general elections.
It did not make sense for the county to charge the townships when the same taxpayers would pay the cost either way, the budget committee decided.
Town supervisors Yvette Dullinger, Sylvan, and John Benson, Moose Lake, echoed Wells appreciation statement.
Ballenthin and SWCD board member Ken LaPorte asked the board to restore the county's $7,250 annual contribution to SWCD. The budget committee has recommended that be cut in 2016, because SWCD is scheduled to receive a $100,000 state Board of Water and Soil Resources grant in 2016.
Ballenthin and LaPorte explained the grant has very restricted uses and cannot be used for general operating expenses. The county money has paid in the past such operating costs as insurance and training.
No one appeared at the budget/levy public hearing to complain this year, but the administrator and auditor-treasurer office have received telephone call complaints, largely from districts where property values increased in the last year and in Pillager and Northland Remer-Longville School Districts.
Pillager School Board implemented an operating bond increase authorized as an option by the state for 2016. Northland implemented a voter approved school building referendum, which is slightly above a building safety bond the school board planned to initiate if the referendum had failed.
Both raised the school, not the county, portion of those districts' 2016 levies.
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