Windom mulls potential new sales tax

Talk about it

WINDOM — As local government budgets get tighter and talk of more cuts continues at the state level, local communities are looking for additional sources of income.

At the Tuesday night Windom City Council meeting, council members discussed possible funding sources, including imposing a local option sales tax within city limits to raise funds for capital improvement projects.

The Windom City Council recently completed a long-range planning and capital improvement plan that listed five large capital projects: a fire hall; a new or renovated arena; a swimming pool; capital equipment (fire trucks, grader etc.) and capitalization of an economic development revolving loan fund.

Through much discussion, the list has been narrowed down to three priority projects — the fire hall, arena, and loan fund.

“The council is very interested in moving the project forward, but we realize that we’ll need avenues of funding,” Windom City Administrator Steve Nasby said.

The city council has been talking about a variety of funding sources since “mid- to-late last year,” Nasby said.

Current options being discussed include debt funding, grants and state bonding, equipment fees and imposing a sales tax within Windom.

“We are still looking at a combination of things,” Nasby said.

Adding a local option sales tax has been used in other communities in the area, most recently in Worthington. Voters there passed a half-cent sales tax referendum in 2008 to pay for renovations to Memorial Auditorium and construction of an event center.

The sales tax funds are currently ahead of schedule. It ‘s anticipated Worthington’s $6 million goal will be raised in 2017, about a year and a half early.

According to current Minnesota law, to impose a sales tax, local governments must first pass a resolution proposing the tax, including the tax rate, amount of revenue to be raised and intended uses and the anticipated date the tax will expire.

The proposed tax must then be passed by local voters at a general election. Once passed, it must be submitted for legislature approval.

Proposed taxes, however, may only be included on a general election ballot. Unless the current law is changed, Windom voters would not be able to vote on the sales tax increase until 2014 general election.

The Windom City Council is considering petitioning the Legislature to waive the normal process, allowing the city to submit the proposal to the state first and then bring it to a public vote.

“The legislature can waive steps under current law,” said Nasby, adding that if the city waited and didn’t ask for the waiver, the project could be delayed for years.

According to the State of Minnesota, Cottonwood County had $27,396,465 in taxable sales in 2010. The proposed sales tax would apply only to the city of Windom. It’s estimated by the Department of Revenue that 75 percent of the county’s taxable sales are made within Windom’s city limits.

Using those figures, a 1 percent local sales tax, for example, would generate about $205,000 annually.

The city council will continue to discuss the sales tax and additional funding methods at its regular meetings, which Nasby noted are open to the public.

Ultimately, the public will decide to implement the tax, he added.

“There is a lot of public input and education to do yet and there are steps the city council needs to take and we are inviting the public to be involved,” Nasby said. “We’re just taking off on the first step.”

Daily Globe Reporter Alyson Buschena may be reached at 376-7322.

Tags: news, windom, taxes, minnesota, legislature, politics