Will county reap sales tax surplus?



Winona County is on track to have a surplus of local sales tax funding for road projects. A new, county-wide, half-cent-on-the-dollar sales tax benefitting county roads started this January, and in the first four months of 2017, Winona County collected $778,000 in local sales taxes. At the current pace, the county is on track to bring in $2.3 million this year.

That would be significantly higher — 35 percent higher — than the $1.7 million in annual revenue county officials projected when the County Board voted to approve the sales tax and agreed on projects to be funded by it last fall. The $1.7 million figure was admittedly conservative; county officials did not want to overpromise revenue. Currently, county officials are planning to spend an average of $2 million in sales tax revenue on county roads per year over the next five years. If sales taxes keep flowing into county coffers at the current rate, the county would generate a $300,000-per-year surplus under such a spending plan. In the context of the county’s more than $9-million-per-year budget for road and bridge repairs, an extra $300,000 is not such a big figure, but it could enable county leaders to complete a few more projects and perhaps get closer to repairing county roads faster than they fall apart.

In 2013, the Minnesota Legislature passed a law allowing counties to adopt a half-cent local sales tax to fund transportation projects. Normally, local sales taxes must be approved by voter referendums, but this new legislation allowed a simple majority of the County Board to adopt a sales tax so long as the proceeds went exclusively toward transportation. Faribault’s Rice County jumped on the local option tax right away, and in 2015 and 2016, Fillmore and Wabasha counties followed suit.

Winona County joined the club this year, and the decision was somewhat controversial. After a couple years of eschewing the local option tax and calling for the legislature to increase traditional funding sources for road repair, rural Winona County commissioners Steve Jacob and Marcia Ward supported the sales tax last year. “The fact of the matter is the roads are falling apart and we need to do something,” Jacob said. Winona Area Chamber of Commerce President Della Schmidt, city of Winona Port Authority Commission Chair Mike Cichanowski, and Winona City Manager Steve Sarvi all came out against the sales tax, saying it would drive business across the Mississippi River to Wisconsin, that Winonans and Winona businesses would pay without reaping benefits, and that it would likely wipe out any chance of Winona passing its own half-cent sales tax to fund city projects. Greg Olson and Jim Pomeroy represent Winona neighborhoods on the County Board, and they voted against the sales tax. With the promise of more than $2 million in sales tax funding for the Goodview Road project in her district, commissioner Marie Kovecsi joined Jacob and Ward in a 3-2 vote to approve the tax.

Where tax is collected, spent

Information on where this year’s sales tax has been collected is not yet available, but historical data shows that the bulk of the county’s taxable sales occur within Winona city limits. In 2015, the latest year for which there is data, Winona contributed 81 percent of the county’s total taxable sales.

Most of the local sales tax money will go to rural roads. Each year, the County Board updates its Capital Improvement Program (CIP), a five-year plan for what infrastructure projects it will fund and how. It also lays out how the county will use sales tax revenue. This year, the county plans to spend $1 million of local sales taxes on County Road 112 near Altura, County Road 115 outside St. Charles, County Road 12 near Nodine, and county roads 31, 37, and 116 in western Winona County.

The Winona County Road & Bridge Committee is still drafting the 2018-2022 CIP, but the current version calls for the county to spend $10 million of local sales tax funds over the next five years. That includes $2.2 million in 2018 to widen County Road 129 (Goodview Road), which runs through a portion of Goodview and ends at Winona city limits, and $155,000 in 2019 to resurface County Road 17 from Witoka to the bottom of the Pleasant Valley hill, not far from Winona city limits. The other $7.7 million in local sales tax expenditures are slated to be spent on County Road 12 between Witoka and Ridgeway, County Road 113 in Saratoga Township, county roads 35 and 37 near St. Charles, County Road 25 near Wyattville, and culvert repairs on various roads throughout the county.

The new sales tax may never end unless the County Board votes to eliminate it. The 2013 legislation requires counties to name a specific list of projects to be funded by the sales tax revenue, and it requires counties to stop collecting the tax once those projects are funded. However, Winona County and other counties simply cited their CIPs — which are added onto every year — as that list.

In a meeting this March, when Winona County officials were negotiating with the city of Goodview over the Goodview Road project, Olson brought up the idea of ending the sales tax. He also noted that the tax may be used for any transportation project and could be spent on city streets instead of county roads.

“Everyone uses the county roads, even the city of Winona residents,” Winonan Ted Hazelton said at a public hearing last fall. “It’s a half a cent. It’s a minimal investment. Everyone will benefit.”

The County Board will vote on the 2018-2022 CIP and how to use sales tax revenue later this fall.


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