A new sales tax in East Grand Forks cleared its first formal hurdle on Tuesday, Jan. 21.
City Council members voted 6-1 to adopt a resolution that outlines the 2% tax and sends the paperwork for it to Minnesota lawmakers -- who are now next in line to consider it -- and commits to ultimately putting the question to East Grand Forks voters.
If the Legislature and city voters both OK the new tax as it stands, it would tack an additional 2 cents onto every dollar spent on most goods and services, minus essentials such as clothing and groceries.
On aggregate, the move would increase city sales taxes by one percentage point because an existing 1% sales tax, which was approved in 2016, is set to expire this summer -- at “just the right time,” Mayor Steve Gander said.
The new tax would last for 30 years or until it brings in $48.5 million, but city staff expect it would raise that sum in 25 years. Revenue from the tax would pay back the bonds the city would issue for all or some of a $32 million list of Parks and Recreation projects, the biggest item of which is a $24 million plan to revamp the East Grand Forks Civic Center and VFW Memorial Arena.
Despite the wording of the resolution, city staff and officials said they could decrease the new tax’s rate to a figure below 2% before they have to file the ballot question with the Minnesota secretary of state in August. Setting a lower rate while keeping the entire slate of projects might not be as financially feasible for the city, but a private donation before the question is finalized would change those calculations.
If or when the new tax makes it onto ballots, voters would be asked to consider each hoped-for project individually. Beyond the arena, revamps are a $3 million repair of the Greenway’s trail system, $2.5 million worth of work to city athletic fields and $2.5 million to replace a boat ramp and add more trails at LaFave Park. The total cost of those projects is one-third that of the one for the arenas, which would add a second sheet of ice to the Civic Center and turn the VFW Arena into a fieldhouse.
“The repurposing of the VFW Arena will be a huge step to helping our youth sports,” said East Grand Forks resident Robert Sauter, 37, who addressed City Council members before their vote. It could open up more practice spaces for football and wrestling, he said, and attract young families to the city.
If voters ax a project from the list, it wouldn’t change the new sales tax rate because it would have already been set in stone by that point. But it would make the new tax expire sooner.
The soon-to-expire sales tax pays back the loan the city took out to renovate a pool at Sherlock Park. It brings in about $74,000 each month.
Council member Dale Helms, a consistent skeptic of the tax and the cost of the projects it would pay for, was the lone “nay” vote on Tuesday. He said the city could fix up its existing facilities for a lot less money.
“What’s in front of us here, in my book, is sugarcoated pretty heavily,” Helm said. “And that bothers me.”