Voters’ turn to weigh in on tax

Red Wing voters will get a say Tuesday on the city’s proposal for raising funds for specific projects through a local half-cent sales tax.

The projects involve riverfront improvements such as trail work, boat docking and a marina building, repairs to the Sheldon Theatre, work to make Highway 61 safer and easier for pedestrians to cross, and partnering with the Red Wing Area Seniors and Red Wing Collectors Society Foundation for a joint facility.

If approved, the city could spend up to $14.88 million on the proposed projects and collect the tax for a maximum of 20 years. Citizens would have to approve another tax and set of projects for it to extend beyond that.

The city would bond for the projects’ funding and then use the money collected from the tax to pay that off.

City staff and council members in favor of the tax said it is an option for diversifying revenues as state aid drops and other issues impact the city’s budget.

About a year ago the city considered franchise fees on utilities to bring in more revenue, but “citizens said overwhelmingly ‘no,’” Council President Ralph Rauterkus said this week, so this tax is another option.

The riverfront and historic downtown draw a lot of visitors, Rauterkus said, so investments could be good for economic development.

“It’s not only good for citizens, but for tourism as well,” he said.

Some have raised concerns about the effect of the tax on local businesses. Many already are facing competition from online sites and other outlets.

City staff often has pointed out that other similar towns and “regional centers” — Rochester, Albert Lea, Mankato and Worthington, for example — have local sales taxes in place that don’t appear to have had a significant impact on local businesses.

The half-cent tax is estimated to cost the average resident of Red Wing $41 per year, according to the city. There also would be a $20 tax limit on vehicle purchases.

A majority of votes cast is needed to approve the tax. If Red Wing voters approve it, the state Legislature also will have to give its consent before the tax can be put in place.

Council members voted 6-1 in August to put the question on the ballot. Some said they were moving the tax forward so citizens would have a say.

“This is an option for citizens to impose a tax on themselves,” Rauterkus said this week.

Mayor Dennis Egan, who vetoed the measure but was overridden by the council, and other council members said they had wanted a smaller package. But others said the set of projects work together to help improve Red Wing overall.

Projects funded by the tax must be limited to capital projects of regional significance. The Local Option Sales Tax Advisory Committee sifted through 13 project ideas submitted before making its recommendation to the City Council.

Here is what the Red Wing local option sales tax question will look like on voters’ Nov. 6 ballots:

Shall the City of Red Wing be authorized (a)to impose a temporary sales and use tax of one-half of one percent and an excise tax of $20 per retail sale of a motor vehicle for a period of up to 20 years and (b)to issue bonds in an aggregate amount not to exceed $14.88 million, plus the cost of issuing the bonds and funding the debt service reserve, to finance a portion of the cost of acquisition and betterment of any or all of the following projects: riverfront improvements, downtown transportation improvements, Sheldon Auditorium Theatre improvements and a facility housing the Red Wing Area Senior Center and the Red Wing Pottery Museum; provided that such tax shall terminate sooner should the City Council determine that all such costs and debt have been paid?

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