At its Tuesday, Feb. 15 meeting, the Wright County Board of Commissioners unanimously voted to extend the county’s half-cent Local Option Sales Tax through 2032.
Wright County adopted LOST in the fall of 2017 with a five-year end date of Dec. 31, 2022. If the county was to extend LOST, given the timeline of future projects, that decision was required to come early in 2022. Over the last year, the were several virtual and in-person public meetings to discuss extending LOST. At Tuesday’s board meeting, there was a public hearing held, but nobody from the public chose to speak for or against the extension.
LOST funding can only be used for Highway Department-related projects – roads, bridges and highway buildings. LOST has become a popular way for counties to generate money to pay for road/bridge projects instead of placing that burden on property taxpayers.
Of the 87 counties in Minnesota, 54 have a wheelage tax (typically a $20 surcharge paid when renewing license tabs), 50 have a Local Option Sales Tax and 31 have both. Of the 12 largest counties in the state, only Wright and Anoka counties don’t have both LOST and a wheelage tax. Only 16 of 87 counties have neither tax and that list includes the six smallest counties in the state, 11 of the 18 smallest counties and only one county in the 50 largest in population (Meeker County at No. 43).
The commissioners weighed in on their thoughts about extending LOST. Commissioner Darek Vetsch asked the list of eligible projects be reviewed by the county board to create a prioritization of specific projects.
“I think the Local Option Sales Tax serves a good purpose, however I want to have an opportunity to discuss the items on the (project) list and how the funding is allocated,” Vetsch said. “I would like to have (approval) contingent that we have a Committee of the Whole meeting to discuss the list and make modifications to it.”
Commissioner Mike Kaczmarek stated that the provision for buildings should be given consideration because $1 million may get a mile or so of new road construction, but could go a long way to building or upgrading a highway facility like a maintenance shop.
“The support (was) overwhelming in my district – it seemed like not a lot of resistance at all to continuing it,” Kaczmarek said. “There was a lack of knowledge, which I did my best to educate people and myself. I would agree with extending (LOST), but taking another look at how it would be allocated.”
Commissioner Mary Wetter said she was a bit conflicted on the subject because she heard strong opinions from constituents and business owners on both sides of the question of whether to retain a Local Option Sales Tax.
“I have to say that I hate taxes and I hate sales taxes,” Wetter said. “I’ve gotten many calls, letters and emails against the Local Option Sales Tax. My district is the eastern/northeastern part of the county and many of the people are against it and a lot of them support it. I’m looking at both ways, whether you want maybe a very huge hike in your property tax because that is how we would make up that difference. I don’t think that would be the way to go either.”
Commissioner Mark Daleiden pointed out that, if LOST was allowed to phase out, many of the projects currently funded through LOST would have to come from another source – most likely through the levy assessed to property owners. He added that one of the benefits of LOST is that a quarter or more of the revenue generated comes from outside Wright County.
“One of advantages of the LOST taxes is that 75 percent comes from inside the county, but 25 percent or more comes from outside the county,” Daleiden said. “That’s an advantage and when we have (Interstate) 94 going through and the traffic that’s on there is pulling off and eating or going to a gas station, that’s a great benefit to the residents of the county in that 25 percent or more is coming from outside the county for people who are using our roads and wearing them out.”
Commissioner Chris Husom mentioned that LOST isn’t applied to food, clothing or big-ticket items like cars and boats. She added that it is a user tax and those that can afford more spending provide more money to the LOST pool than those who don’t do as much spending.
“People that don’t spend a lot of money, they’re not the ones that are paying,” Husom said. “Instead of raising people’s property taxes to meet the needs that we have for transportation, this is a way to gather it from people who can afford to go out to restaurants and buy more expensive toys. That, I think, is less of a burden for a lot of people.”
The board unanimously approved extending LOST with a timeframe beginning Feb. 15, 2022 and scheduled to sunset Dec. 31, 2032.
“I think five years was a good test and I think it’s been successful,” Daleiden said. “We got a lot of information over those five years.”
A future county board will have the option to eliminate the Local Option Sales Tax at any time in the future. To see a map of the counties that have Local Option Sales Taxes and/or wheelage taxes, click here: https://www.mncounties.org/legislative/local_option_taxes_for_transportation/index.php