Winona County leaders made plans on Tuesday for adopting a half-cent sales tax to fund road repairs. Charging an extra half-cent in sales tax on every dollar spent in Winona County would raise an estimated $1.7 million per year to fund the county’s growing wish list of unfunded road repair projects. In years past, the County Board has been reluctant to resort to a local sales tax to fund roads and bridges, but this summer the still-divided commissioners agreed to consider it. On Tuesday, the Winona County Road and Bridge Committee proposed a schedule for adopting the tax and a plan for spending it. If the new tax is adopted it is unclear when, if ever, it would end.
Mileage-wise, $1.7 million does not go that far. It is enough to overlay a handful of miles of busted roads with a thin layer of new pavement or to completely reconstruct less than 1.5 miles of roadway. However, it makes a significant addition to the county’s $5.6-million-per-year budget for road and bridge projects. On Tuesday, the Road and Bridge Committee submitted a new five-year spending plan, called the capital improvement plan (CIP), for road and bridge projects that included the proposed sales tax money. Under the proposed CIP, that hoped-for-but-not-yet-approved sales tax revenue would fund two 2017 projects that had previously not even been on the CIP — meaning that, as of last year, the county did not plan to complete the projects before 2020. A $450,000 project to overlay three miles of County Road 115 west of Utica would benefit from $350,000 in proposed sales tax funding. A $120,000 project to resurface County Road 112 west of Altura would be wholly funded by local sales taxes.
Commissioner Steve Jacob’s district would get some more sales tax funding in 2019 and 2020 under the proposed CIP. A $1.8 million project to resurface 4.3 miles County Road 113 in southern Saratoga Township would be completely funded by sales taxes in 2020. According to a recent Minnesota Department of Transportation (Mn/DOT) study, this is one of the worst sections of road in the county. A $3.4 million project to reconstruct 2.9 miles of County Road 41 north of Elba would receive $1.3 million in local sales tax in 2019.
In 2018, the draft CIP proposes dedicating $2 million in local sales taxes to reconstruct Old Goodview Road (County Road 129) in commissioner Marie Kovecsi’s district. Kovecsi has championed the project to add a shoulder on Old Goodview Road to improve bicycle and pedestrian safety. County Road 25 in Hart and Warren townships in commissioner Marcia Ward’s district would get $1.75 million in local sales taxes for resurfacing projects in 2021.
Normally, when Minnesota cities and counties want to enact a local sales tax, they need voters to approve the new tax in a referendum. However, in 2013, the state legislature gave county boards the power to enact local sales taxes by a simple vote of the board — without voter approval — provided that the counties only used the money for road repairs, specified which projects the money would go toward, and stopped collecting the tax once those projects were funded. While the proposed CIP lists specific projects that would receive sales tax funding, county officials said they would plan to arrange the tax so that they could change which projects receive the funding in the future. That gives the county the flexibility in future years to change its plan, if need be, county administrator Ken Fritz said at Tuesday’s meeting.
It is also unclear when the proposed sales tax would end. In past discussions, county commissioners have pointed out that, in cities and counties across Minnesota, whenever local sales taxes are adopted — even if they are billed as temporary — they wind up becoming permanent. The 2013 law requires counties to stop collecting the tax once the specific list of projects is funded, but Winona County leaders proposed using Wabasha County as a model. Last year, the Wabasha County Board enacted a sales tax for road projects. Which projects? The County Board listed the county’s entire CIP. On Tuesday, the Winona County Road and Bridge Committee recommended doing that, as well.
Jacob and Ward said they thought the sales tax should be reviewed by the County Board and not automatically extended. Fritz said that would happen through the budget process.
Every year, as part of its budget, the county approves a new CIP for the next five years of road and bridge projects. If, in future years, the County Board keeps adding sales tax funded projects to its CIP and never votes to end the sales tax, it is unclear if the sales tax would ever end.
“I think it’s a tax that, once enacted, will never go away,” commissioner Jim Pomeroy said at the County Board’s June 14 meeting.
Pomeroy and Greg Olson spoke against a half-cent sales tax at that meeting. The real solution to Winona County’s and Minnesota’s transportation funding woes needs to come from the legislature and resorting to local sales tax funding will only take the pressure off St. Paul, Pomeroy and Olson argued. Pomeroy also raised concerns that increasing the sales tax would hurt businesses near the Wisconsin border. “I’m not for raising taxes but there is a huge demand,” Ward countered.
In recent days, Governor Mark Dayton has met with legislative leaders to try to work out a deal for a special legislative session to pass a tax relief bill Dayton vetoed and a bonding bill for approximately $1 billion of construction projects across the state, which legislators failed to pass. Local legislators were cautiously hopeful that a transportation funding package might be passed in a special session, or that the bonding bill would include significant funding for roads and bridges, but Fritz and Winona County Highway Engineer Dave Kramer advised the commissioners not to hold their breath.
If there is a major transportation deal in an August special session, the County Board could scuttle its plans for the local sales tax, Fritz advised.
The Road and Bridge Committee recommended that the County Board hold a public hearing on the proposed half-cent sales tax on August 23 at the board’s 7 p.m. meeting. The Road and Bridge Committee’s recommended schedule calls for the County Board to take a final vote on September 13. The County Board must decide before October 3, the deadline for notifying the Minnesota Department of Revenue of the new tax. If approved, the tax would begin on January 1, 2017.
In its June 15 edition the Winona Post erroneously reported that three commissioners at the June 14 meeting agreed to consider the half-cent sales tax. Although Pomeroy spoke against the tax, he ultimately voted with Jacob, Kovecsi, and Ward for it. Olson left the room to take a phone call during the vote.