East Grand Forks leaders didn’t go all the way back to the drawing board on Monday, Feb. 24, but they took a step in that direction before agreeing to significantly scale back plans for a new sales tax.
City Council members voted 5-1 to ask the Minnesota Legislature to approve a 1% city sales tax that would expire after 20 years or when it brings in $15 million, whichever comes first. Of that, $13 million would go toward fixing the city’s aging ice arenas, and $2 million would go toward renovating the sports fields at Stauss Park.
That new request is headed to the state Capitol in St. Paul and, if lawmakers OK it, to East Grand Forks voters for final approval. It’s considerably smaller than one Council members approved 6-1 on Jan. 21.
That larger plan would have taxed money spent on most goods and services in the city by 2% and would have lasted for 30 years or until it brought in $48.5 million for a $36 million slew of parks and recreation projects. Foremost on the list was a $24 million proposal to add a second sheet of ice at the East Grand Forks Civic Center and turn the VFW Memorial Arena into an all-season fieldhouse.
City leaders could have scaled back that plan before formally asking for approval from East Grand Forks voters, who would have voted on each project individually. The same is true for the new request, too. Both plans, in effect, set a ceiling for the proposed new tax and the projects for which it would pay.
The previous plan would have hiked sales taxes in the city by only 1%, on aggregate, because it would have replaced an existing 1% sales tax that pays for upgrades to a public pool in Sherlock Park and is expected to expire this summer.
Monday’s vote to ask for a new 1% tax means that the city’s sales taxes rate, presumably, will stay put or go down once the “pool tax” expires.
The vote also leaves considerably less public money to fix either ice rink and means a pair of other projects -- a revamp of LaFave Park and repaving the city’s Greenway trail system -- will need to look elsewhere for funding.
Both sales tax proposals are -- or were -- designed to pay back the money the city would have borrowed to fund all or some of those projects.
Documents prepared by city staff ahead of Monday’s meeting indicate that a 1% tax over 15 years -- five fewer than the Council actually approved -- would bring in $11.6 million, which presumably means the proposal that was actually approved would bring in more than that.
Thirteen million dollars would cover a replacement of the Civic Center and VFW Arena’s ailing refrigeration systems, fix their parking lots and make sure each building is compliant with the Americans with Disabilities Act.
But that doesn’t necessarily mean that’s the plan East Grand Forks staff and officials ultimately will pursue because they could still decide to scale down the project or seek private funding to pay for a fancier plan. Council member Marc DeMers said he is “a little more bearish” on how much the city could raise privately.
Mayor Steve Gander said setting the proposed tax at 1% would preserve the goodwill of the city’s business community and make the opportunity for fundraising “infinitely greater” than it would have been if the city had stuck with the 2% proposal.
“Which is funny because, if you can’t raise a million dollars in sales tax, but you can go and get 5 million in fundraising, it kind of says something, too,” DeMers said.
“I’ll give you the shirt off my back, but don’t come and take it,” Gander replied. “That’s what, I think, goes on.”
The rethink on Monday came after a pair of Minnesota lawmakers reportedly said they didn’t expect East Grand Forks’ 2% proposal to make it through the Legislature. Rep. Deb Kiel, R-Crookston, and Sen. Mark Johnson, R-East Grand Forks, had a dim view of the first sales tax’s chances there, according to Gander, who has been generally opposed to the 2% plan for months. The deadline to submit it is Thursday, Feb. 27.
The mayor told the Herald he first spoke to Kiel and Johnson about the city’s sales tax aspirations about seven to 10 days before Monday’s vote.
But the city had been kicking around the tax proposal it approved last month since the weather was warm.
“It really would have been premature to kind of test drive a bunch of different scenarios,” he said of not broaching the subject with the city's representatives sooner. “And so once they received from us our proposed language for their bill, only then, I think, was it appropriate. They did walk it through the key avenues that it would have to go through to get that feedback, and I think it would have been really not very courteous to them to ask them to do it multiple times (and) basically use them as a focus group.”
Even if some council members apparently considered the 2% plan a placeholder, Council President Mark Olstad appeared annoyed that it had been preempted by state lawmakers.
“Doesn’t look like it’s local governing,” he said. “It’s state governing that won’t let you do what we think you can do, and that’s really frustrating.”
Council member Clarence Vetter was the only “nay” vote on Monday, and he pushed then for a 1% tax that would pay for all four proposed parks and rec projects.
Council member Dale Helms, who was often skeptical of the larger-scale proposal’s price tag, was the only one to vote against it last month. He was not present on Monday.