The half-cent sales tax used to fund road improvement projects in Crow Wing County is here to stay — at least until 2040.
The county board unanimously approved extending the tax Tuesday, April 13, following a public hearing during which one resident spoke. The extension beyond the initial 2025 sunset date was requested by County Engineer Tim Bray, who noted work on the 2022-26 highway improvement plan would be difficult without knowing whether that revenue would be available.
During Tuesday’s meeting, Bray reviewed the impact of the countywide local option sales tax as a significant source of dollars to support road improvements and maintenance. Despite initial misgivings of the pandemic’s effect on sales tax revenues, 2020 ended up landing county coffers the highest total collected in one year thus far. This, Bray said, is an indication the sales tax is a more stable revenue source than state aid, which is dependent on gas tax revenue and slipped significantly amid a year of distance learning, telecommuting and reduced travel in general.
More than $7.4 million in sales tax revenue was collected in 2020, a 6.5% increase over 2019, generated from approximately $1.5 billion in retail sales in Crow Wing County. This is significantly higher than projections at the time the board considered adopting the sales tax, which predicted the county would garner $4.2 million annually. A study conducted by the University of Minnesota Extension at the time predicted slightly more than half of the tax would be covered by tourists spending money in the county.
The tax earned $31.2 million for the county thus far, all of which was directed toward road reconstruction, resurfacing and maintenance. Bray said this infusion of cash resulted in significant improvements in the ride quality index throughout the county — or, more simply put, the county’s roads are a lot less bumpy. A map of the county system once splattered in red, indicating poor road quality, now sports mostly yellow and green tones.
According to Bray’s figures, replacing the revenue from the sales tax would mean increasing the county’s overall property tax levy by 19.1% — and that’s assuming no other departments proposed increases. This would equate to a nearly 500% increase to the portion of the levy dedicated to the highway department.
Beyond catching up on maintenance, Bray said there are expansions to the road and highway system he’d like to implement in the future, including longer-lasting fixes, intersection and safety improvements, wider roadway sections in some areas and the conversion of some gravel roads to pavement.
State law requires a plan outlining every project revenues from the tax would support. Included in the county’s sales tax implementation plan through 2040 are 78 pavement rehabilitation or reconstruction projects on county highways and roads, 13 bridge replacements or rehabilitations and four conversions of gravel roads to pavement. Also supported by local option sales tax dollars are general maintenance projects such as seal coating, center and fog line painting, crack sealing, patching, shouldering, graveling and dust control.
One person spoke via video conferencing during Tuesday’s public hearing. Dave Peterson, chair of the Ideal Township Board and president of the Crow Wing County Association of Township Officers, said he believes the tax is a good thing but thinks some of the revenue could be shared with township governments.
“There’s nothing in the statute that says you cannot share this tax with the other local jurisdictions. I think we’re thinking too much in a silo mentality here in that we’re just thinking county roads,” Peterson said. “ … We would like to see, as townships, some of that excess revenues — which are being generated way and above what the forecast was — shared.
.. When people come up here in the summers and our population booms by two-and-a-half to three times … they don’t exclusively use county roads, but they’re using the local roads system. And we don’t have the ability to generate revenues like the county does.”
Commissioner Paul Koering, participating in the meeting from Florida, asked Peterson whether he was speaking on behalf of all the townships in the county. Peterson clarified the township association has not formally voted on the matter but instead he was sharing a general consensus he felt was shared by many township officers.
Koering later asked Bray to clarify whether sales tax revenue could be shared with townships, noting he thought state law prohibited such an action. Bray said he believes it is possible but would require better planning from township partners, since the law requires hosting a public hearing to share all the projects tax revenues would support.
Also providing input was the Brainerd Lakes Chamber of Commerce, which in a letter to the board stated it was neither supporting nor opposing extension of the tax. President Matt Kilian did, however, suggest reducing the length of the extension from 15 years to 10 years in the chamber’s comments. There didn’t seem to be a compelling reason to extend the tax for 15 years, Kilian wrote, other than it being a round number. Kilian noted Bray’s figures show tax collection is continuing to increase and revenues are on pace to exceed 2020.
“This raises a reasonable question about how much local tax revenue is enough to sustain maintenance goals. With inevitable changes in the economy, demographics, technology and politics, a 10-year extension would seem sufficient,” Kilian wrote. “More frequent evaluation would accommodate two cycles of a five-year capital improvement plan to determine whether the half-cent sales tax would be warranted in the future. In our view, it would ensure continued public transparency and accountability, which has been the goal of the Crow Wing County Board.”
Koering, who voted against the sales tax in 2015, noted he’s since changed his position.
“It’s no secret that I’m very, very conservative and I’m kind of anti-tax. So when this came up the very first time … I was the lone vote that voted against it. Why? Because I just felt like it was another tax that would never go away,” Koering said. “ … The great thing is, is Paul Koering evolves. I have seen the fruits of this down in my district. … I have a lot of rural people that are going to Brainerd/Baxter for their work and I have heard from those people that are thanking me and the county board for in essence making the transportation system workable for them to be able to drive to work.”
Koering made the motion to approve a resolution extending the tax, seconded by Commissioner Rosemary Franzen. Commissioner Doug Houge asked what commissioners thought of the chamber’s proposal to reduce the extension by five years. Houge noted the county board could vote to rescind the tax at any time, but thought the chamber’s suggestion was reasonable and wouldn’t create much extra work for county staff.
Houge made a motion to amend the original motion reflecting this change, but it died for lack of a second. The board then unanimously approved the 15-year extension.