County once again mulling half-cent sales tax for transportation projects
WORTHINGTON — Six months after broaching the idea of implementing a half-cent sales tax to fund transportation projects, Nobles County commissioners revisited the issue during a Wednesday morning work session.
Nobles County Public Works Director Stephen Schnieder said it was initially thought the half-cent sales tax could generate an extra $950,000 per year for the county. However, that estimate has since been reduced due, in part, to the closure of a major retail store in Worthington.
Whatever sales tax revenue would be raised would be earmarked specifically for road projects, including reconstruction and overlays. The sales tax would be in addition to the $10 per year wheelage tax the county implemented in 2014. The wheelage tax generates $240,000 for transportation projects within Nobles County annually.
To implement the sales tax, the county would need to identify a list of projects to be funded by the sales tax and then host a public hearing on the issue. Once the sales tax is implemented, projects cannot be added to the list, so it would be best to develop a thorough list before the hearing is scheduled, Schnieder said.
Topping his list of projects to be funded by a half-cent sales tax is a roundabout at the intersection of Oxford Street and Diagonal Road, Schnieder said. Discussed for the past few years, the project could be timed with a resurfacing of Diagonal Road from Oxford Street to Interstate 90, he added.
Commissioners asked if the half-cent sales tax could be used to make bond payments, if they would choose to pursue bonding to complete a longer list of road projects. Schnieder said he thinks that's a possibility.
“I think more and more of the counties are going to this (the half-cent sales tax),” he told commissioners. “We are not seeing an increase in funding.”
The current transportation funding shortfall amounts to about $3 million per year, Schnieder said. With implementation of a half-cent sales tax, it would only make up about one-third of the shortfall annually, but every little bit helps.
“I just hope that we aren’t taking pressure off the state and federal government by doing this,” said Commissioner Donald Linssen. “Locally, we’re trying to take care of our problems. Every year the gas tax comes up and little or nothing is done with it. To me, the brunt (of the money) should come from the state and federal government.”
Schnieder said he was told Nobles County will get about $650,000 more in construction and construction maintenance money this year, and he was told the county had the highest percentage increase of any county in Minnesota.
“That’s good news,” Schnieder said, adding that 60% of that money goes toward construction.
Board chairman Matt Widboom asked what the next step would be in the process of potentially implementing the half-cent sales tax. Schnieder responded that projects will need to be identified, and a date will need to be set for a public hearing on the issue. Once the board has completed both of those steps, the request must be submitted to the Minnesota Department of Revenue at least 90 days before the planned implementation of the tax.
Commissioners asked that the sales tax issue be added to Tuesday’s board agenda, where they may take formal action to direct Schnieder to begin formalizing a list of road projects.
Implementation of the tax is not voted on by the public, but it will ultimately need to be voted on by the county board after the public hearing.
Initial 2020 levy increase
Nobles County Finance Director Jerry Vyskocil told commissioners Wednesday that with all of the budget requests and salary information received from department heads for 2020, a levy increase of 4.3% is the starting point for upcoming discussions.
Vyskocil cautioned that several pieces of information are still outstanding, and figures were taken from 2019 costs for items such as insurance.
The finance director said the 4.3% levy starting point is a bit lower than in previous years, and he said that’s due to the county using excess funds to pay off bonds in the next couple of years.
“Debt service is taking a big levy reduction from prior years,” he said.
Nobles County Administrator Tom Johnson said he anticipates the levy amount will increase “a little more” once all of the information is received. Some of those added expenditures, however, will be offset by a $64,000 increase in County Program Aid, which wasn’t yet factored into the 2020 revenue stream.
“A month from now we’ll have a lot more answers,” Vyskocil said.
There have been two requests for additional personnel — one in the auditor-treasurer’s office and one in the sheriff’s office, he added. There will also be an additional summer worker request coming from the Parks Department, shared Linssen.