ADVERTISEMENT

ADVERTISEMENT

East Grand Forks advances 1.25% sales tax to Legislature

A 5-2 vote on Tuesday, Jan. 4, sends a 30-year, 1.25% sales tax proposal to Minnesota lawmakers for a second round of approval. If they OK it, then the next and final step for the proposed tax would be a citywide referendum.

East Grand Forks city hall

A new citywide sales tax in East Grand Forks has cleared the first of three civic hurdles.

Looking for a way to fund a dramatic set of renovations to the city’s ice rinks and baseball diamonds, City Council members voted 5-2 on Tuesday to forward a 30-year, 1.25% sales tax to the Minnesota Legislature for consideration this spring. If lawmakers approve the new tax, it would then need to be approved by East Grand Forks voters this November before taking effect. Voting in favor of the tax were council members Tim Riopelle, Tim Johnson, Marc DeMers, Brian Larson and City Council President Mark Olstad. Voting against were Clarence Vetter and Dale Helms.

“It’s something that’s, potentially, the biggest thing that the city does since probably the flood,” DeMers said shortly before the vote. “It’s an impact statement. It’s an impact piece.”

Assuming that citywide sales grow by 1% each year, the tax would collect an estimated $27 million that would pay for at least a portion of hoped-for renovations at the East Grand Forks Civic Center and VFW Memorial Arena. The renovations, as presented in a $37.4 million plan produced by city consultants, would address a laundry list of mechanical and logistical issues, renovate locker rooms, and, most noticeably, attach the civic center to a planned grandstand at an adjacent baseball field and create a shared viewing area at the VFW arena and the adjacent Blue Line Club Arena. The gap between the money the sales tax would generate and the total cost of the renovation plan could be bridged with private donations, by slimming down the plan or a combination of both.

The tax and the renovations for which it would at least partly pay has prompted a classic civic balancing act. On one hand the arenas could use plenty of work, especially to the VFW’s aging ice system, and updated facilities could prove to be a regional youth sports draw that helps the city’s economy. On the other, the tax itself is a tough sell to the residents and business owners who’d be asked to pay it until the early 2050s.

ADVERTISEMENT

“I sell everything from a $12 part up to $150,000, maybe more,” Ryan Gregoire, who owns Bert's Truck Equipment on Business Hwy. 2, told council members. “So you start adding a percent and a quarter to some of these bigger-ticket items, that’s a big deal. That adds up.”

Council member Helms, one of two “no” votes, said he wasn’t convinced by a “build it and they will come” approach.

“We need to get something for them to come here for, other than just hockey and baseball,” he said.

DeMers, though, noted that analysis paid for by Grand Forks and East Grand Forks’ combined chamber of commerce indicated a market for more “experiential” businesses in the region.

“That’s our biggest growth market, right there,” DeMers said. “I’m a bit hesitant to think that this (tax) creates just this unbelievable disadvantage for our businesses.”

Mayor Steve Gander said he loves the project and feels it would be “amazing” even if it was significantly cheaper, but he was nonetheless skeptical of the size and length of the proposed sales tax that would pay for it.

“And I guess I can leave it at that,” Gander said before Tuesday’s vote. “I’ll have to decide, depending on how the vote goes and how everything else goes, how to proceed coming out of this.”

That could hint at a possible mayoral veto, a power Gander flexed last spring to change the city’s plans for infrastructure spending. The mayor did not return a Herald request for comment on Tuesday night.

ADVERTISEMENT

If the new tax is approved by legislators and then by residents, it would put East Grand Forks’ total citywide sales tax rate at 8.375%, the bulk of which is imposed by Minnesota’s state government. That’s higher than the current sales tax imposed across the Red River in Grand Forks, where a 2.25% city sales tax sits on top of a 5% state one. Grand Forks also tacks on an additional 0.25% tax on sales at restaurants and hotels.

But, assuming East Grand Forks’ proposed sales tax is ultimately approved, it might not be higher than Grand Forks’ for long because Grand Forks County officials might move to make the county a “home rule” one , which would allow them to institute a sales tax in the county.

Joe Bowen is an award-winning reporter at the Duluth News Tribune. He covers schools and education across the Northland.

You can reach him at:
What To Read Next
A four-member committee will decide whether to reclassify the job description of director of administration or to create new position of county administrator.
Council members Mark Olstad, Brian Larson and Ben Pokrzywinski, along with Mayor Steve Gander and City Administrator David Murphy discussed the top city priorities with legislators
Several other priorities for 2023 were approved by the EDA at its meeting late last year.
Keith Lund, president and CEO of the EDC, said the organization looks at the jobs, population and income growth to determine how the region is doing.