Letter: Consider facts behind local option sales taxSeveral months ago, in anticipation of a growing need to address deferred maintenance and an aging infrastructure, the City Council appointed a committee to explore options that would bring additional revenue to Red Wing.
To the Editor:
Several months ago, in anticipation of a growing need to address deferred maintenance and an aging infrastructure, the City Council appointed a committee to explore options that would bring additional revenue to Red Wing. After researching possibilities, the Revenue Committee determined a local option sales tax to be a viable alternative.
Based on results achieved in numerous other municipalities, a one-half cent sales tax seemed to have the greatest potential for increasing revenue with no impact on property taxes. Proceeds could be used for reinvestment in infrastructure and other capital projects.
The proceeds could also be used to fund discretionary projects like trail and park development and investments with the potential to spur business development and tourism. These kinds of projects are not fundable within the current shrinking revenue-based budget.
Following the recommendation to explore a local option sales tax possibility further, council appointed the Sales Tax Advisory Committee comprising a dozen local citizens to review projects that could qualify for the expenditure of sales tax revenue. STAC has been meeting weekly since mid-June, developing criteria and procedures for evaluating projects.
The deadline for submission of projects is July 16. Once all projects have been submitted, they will be distributed July 18 to each STAC member for review. The STAC will meet July 19 and July 26 to discuss and select those projects that in their estimation will bring the greatest value and benefit to Red Wing and its citizens. The projects will be presented to the City Council at 6 p.m. July 30. No action will be taken at that meeting.
On Aug. 6 there will be a special meeting of the City Council to consider the recommendation and determine whether a referendum question will be added to the Nov. 6 ballot. The question on the ballot would include a list of specific projects.
If the referendum passes, it is still up to the Minnesota Legislature to approve and authorize the tax to be implemented. The tax, if passed, will increase the current state sales tax of .06875 by .005 cents to .07375 and will apply only to local purchases that currently require a sales tax.
Purchases of food and clothing are not subject to the tax. A law passed in 2000 prohibits a local tax on motor vehicles greater than $20 per vehicle.
It is estimated that more than one-third of the sales tax revenue collected will come from people outside of Red Wing, thus helping us pay for improvements and maintenance of resources used and enjoyed by visitors to and residents of this community.
For every $10 purchase of a taxable item, the Red Wing sales tax will generate 5 cents. Estimated annual revenue is $1 million. The number of years the tax will be in force will be determined by the number and cost of the projects that are selected but will not exceed $20 million dollars or 20 years.
STAC members encourage citizens to take advantage of every opportunity in the next weeks and months to understand the process and learn how a local option sales tax might work here in Red Wing. In addition to the meetings listed above, citizens can find information by visiting the City’s website: http://www.red-wing.org.
Red Wing Sales Tax Advisory Committee