The Free Press, Mankato, MN

October 6, 2012

Our View: Expanding sales tax needs thorough airing

The Free Press

— The City of Mankato is considering expansion of its half-percent sales tax for projects of regional benefit. If it proceeds, it should tread carefully and thoroughly.

Voters approved the use of the option tax in 1991 to fund construction of the civic center. In 1996, voters in a referendum approved expanding the use of the tax to fund capital projects at the Mankato Regional Airport. Originally slated to end in 2019, the tax was expanded to 2022.

Some of the discussion at a recent work session touched on assistance toward VINE’s senior center, the Hubbard House and an arts center with an annual spending of $250,000. In seeking both state and citizen support there also was the suggestion that the tax be extended to 2032.

Councilor Charlie Hurd raised the other issue of spending an extra $250,000 with two other tax shifts in the budget — $516,000 for the library and $500,000 to a new utility tax. However, another discussion should center on what has happened with the funding made available to the airport 16 years ago — what was it used for and what plans are there for the future?

While some believe the tax could be used for improving the civic center, City Manager Pat Hentges said without state help starting that project would be like “playing with dynamite” because the project would have to stop when the city runs out of local funding which presently can handle only about half of the $30 million project.

A sales tax does not affect only visitors; it affects everyone who shops. Except for motor vehicles, if it’s subject to a state sales tax, it also has the local option sales tax attached. Consequently, if the city wants to proceed with this extension not only should it seek permission from the Legislature, it may want to strongly consider asking its citizens through a referendum or some other feedback mechanism.

Before any such proposal is put forth, however, the council should have a pretty good idea of exactly how the tax would be used and, if possible, detail the projects that will receive such funding. The proposals will need to be sound and be presented accurately.

As the state scales back on Local Government Aid, municipalities will be faced with determining how — or if — it will replace such funding. If the Legislature approves, such funding mechanisms might be in our future for funding operations not capital projects. The city should proceed with caution on this whole debate.