When East Grand Forks leaders revisited months’ worth of sales tax discussions in about 90 minutes last month, they did so largely on the word of Mayor Steve Gander, who said two Minnesota Legislators who represent the town in St. Paul were skeptical that the 2% tax city leaders had proposed in January would survive there.
That, then, meant a scramble to rehash -- and slim down -- the city’s sales tax idea. The months of deliberation that preceded the 2% plan, even if it was a placeholder for some City Council members, were superceded in some moments by hurried Google searches and promises to double check figures in the morning. Gander said he had only spoken to the Legislators -- Rep. Deb Kiel, R-Crookston, and Sen. Mark Johnson, R-East Grand Forks -- about a week or 10 days prior.
So why the sudden rush? And why did Johnson and Kiel have such a dim view of the city’s sales tax’s chances at making it into law?
The lawmakers each said they waited for the city to formally make a request of the Legislature. That happened on Jan. 21. East Grand Forks City Council members first started kicking around a new tax in July.
Kiel said she knew the city was talking about the sales tax, but she often waits until city leaders determine a specific plan before she heads to the Legislature to write a bill for it.
”We were brought to the table in January,” she said. “It’s not unusual to have that all fire and hurry all of a sudden. It seems like that happens more often than not.”
Johnson said plans like East Grand Forks’ take time to deliberate on and to shop them around St. Paul.
“It’s not like you can pick up a proposal and say, ‘Bam! Look at these issues,’” he said.
After the city approved the initial measure last month, Johnson said, he spoke informally with other lawmakers, some East Grand Forks residents, and Barry Wilfahrt, who heads Grand Forks and East Grand Forks’ combined chamber of commerce. The consensus he heard was that 2%, even if it was something of a placeholder, would be too much of a burden on taxpayers.
Johnson and Kiel were both skeptical of the 2% tax’s chances in St. Paul, especially if it was brought forth for consideration alongside longstanding tax breaks designed to keep businesses in “border” towns like East Grand Forks and Moorhead, Minnesota. Simultaneously pushing for a tax break and a tax hike might be considered contradictory by some members of the legislative committee from which East Grand Forks’ proposal would seek approval, the thinking goes.
The sales tax, regardless of its rate, would pay back the loan the city would take out to pay for a project or projects. Johnson was worried that the repayment schedule on that loan would outlast the useful life of some of the projects themselves, such as new trails along the Greenway.
“The proposal just did not make sense, fiscally, in the long run,” he said.
East Grand Forks leaders and voters agreed in 2016 on a 1% sales tax that’s almost finished paying off renovations to a public pool at Sherlock Park. That proposal, like dozens of others since the '70s, was approved by voters before it headed to lawmakers’ desks in St. Paul.
This year is the first in which the order is flipped: The Legislature is supposed to sign off on sales taxes before voters are asked to do the same. It’s a move that seems likely to hamper Eastside’s new sales tax, which, if approved, would replace the soon-to-expire “pool tax.”
Kiel said she’d prefer sales taxes go before voters first. Johnson said he wrestled with the thought of pre-empting a referendum.
“I want there to be local control on these issues, definitely,” he said. “I don’t want to be derelict in my job, either, and say, ‘hey I’m getting some major pushback from constituents across East Grand Forks and the area’ and then still go ahead with the original proposal anyway and ignore what people are saying. So it does put me in a unique position, but the way the law is right now, that’s the way we’ve got to do it, unfortunately. I would just like to see East Grand Forks vote on it and then go for it, but that’s not the way it is.”