The Crosslake City Council reviewed analysis of a local option sales tax study during its Monday, Oct. 14, regular meeting.

Ryan Pesch, of the University of Minnesota Extension, presented the data to give the council a view of how much the city would expect to raise and who was likely to be paying that tax. Pesch used tax information from the Department of Revenue combined with the demographics and population of Crosslake compared to the spending habits of Minnesotans as a whole to create a projection of the impacts of a .5% sales tax.

Pesch projected proceeds of $240,000 with $46,294 (19.3%) being paid by Crosslake permanent residents and $193,705 (80.5%) paid by nonresidents (including seasonal residents).

Pat Netko asked how Pesch is able to estimate who would pay those taxes. Pesch said that estimate was made by comparing sales tax data from Crosslake to averages from across the state. Basically, these are estimates of personal spending compared to the population of Crosslake. Unless Crosslake residents make significantly more and higher price purchases than people from other parts of the state, then this estimate should be accurate. Pesch did say that Crosslake is somewhat of an outlier because the city appears to have far more nonresident purchases than other places.

There was some uncertainty as to who would would pay sales tax, and to whom - for example, if someone were to order a delivery of concrete inside of Crosslake, or other products. Council member Aaron Herzog said another city had informed him that if someone from outside of Crosslake were to deliver a fireplace within town, that person would still owe taxes. Netko suggested those taxes would not be paid to Crosslake, however. Pesch said he is not a tax lawyer, so wouldn't be able to answer a lot of questions of this sort.

Netko said she would like to see information on how a sales tax has impacted business in other communities. Pesch presented a graph showing sales in several communities with local sales taxes and said there were no discernible changes in trends in those communities with establishment of a sales tax.

Council member Dave Schrupp said the council needs to determine how it would want to use the tax before it could move forward. City Administrator Mike Lyonais said the city has options in going forward, including directing city staff to take the next steps. However, the council could not enact the sales tax yet.

For the city to enact a local tax, it needs to determine how the funds would be used, show a regional benefit and have state Rep. Josh Heintzeman, R-Nisswa, write and support a bill establishing a local sales tax for Crosslake.

It was established that sewer could be defined as a regional benefit, as could municipal buildings, fire halls and public services.

In other business Oct. 14, Crosslake City Council:

  • Learned Crosslake Rolloff is no longer accepting plastic recycling until recycling markets change.
  • Reviewed a potential land purchase for development of parking space and walking trails for Crosswoods Development. The city would have to form a committee to move forward with the transaction. The council agreed to contact the landowner and form a committee to determine the scope and cost of the project.
  • Approved Economic Development Authority resignations and appointments.
  • Learned the sewer project at the site of the new city hall is being postponed until spring in hopes of receiving better bids.
  • Approved a plan by Fire Chief Chip Lohmiller to establish an “Auto Aid” agreement for Northgate Lane. Northgate Lane has several overlapping fire districts with some of them closer to Crosslake than their official fire service provider. Now, with an auto aid agreement, rather than requiring Fifty Lakes or similarly located fire departments to request a mutual aid call to Crosslake, Crosslake will automatically be paged out with Fifty Lakes to fires on Northgate Lane.
  • Directed Bolton and Menk engineering firm to prepare a price estimate for the city for a project to expand the sanitary sewer to properties on Norway Trail and Brook Street.
  • Approved purchase of a $44,000 heater for the Crosslake and Crow Wing County Joint Maintenance Facility.
  • Directed Lyonais to negotiate sale of a property for future expansion of the city's wastewater treatment facility.
  • Approved establishment of a feasibility study for a Big Pine Trail improvement project.
  • Learned that deer in Crow Wing County are now expected to be taken to landfill locations or disposed of in proper dumpsters to reduce risk of spread of chronic wasting disease.
  • Learned the city wastewater treatment plant is performing extremely efficiently and is producing water below laboratory detection limits.