Shoppers in Kanabec County may start seeing a slight increase in sales tax if the Kanabec County Board of Commissioners move forward with their plan to fund local road infrastructure projects.
Commissioners are considering options to pay for road construction including a county-wide 0.5% transportation sales and use tax and a 20-year, $10 million bond to bring additional revenue into the transportation budget. If approved, it would be the first time Kanabec County has implemented either measure.
Kanabec County Public Works Director Chad Gramentz said the amount of state aid and other funding allotments aren’t enough to cover the county’s infrastructure needs.
Gramentz estimated it should cost the county an average of $15,250 per year for each mile of asphalt roadway; gravel roads at $6,467 per mile, per year. Factoring the miles of gravel and asphalt road under the county’s care, compared to what the county receives each year for transportation projects, Gramentz estimated a deficit of approximately $1,800,000 annually.
These deficits assume typical construction costs and do not include bridge work or maintenance costs like crack filling, patching, striping, ditching, replacing culverts, replacing equipment, snow plowing and gravel blading.
Transportation Sales tax
It is this deficit that has prompted the county to consider implementing a county-wide 0.5% transportation sales and use tax. While the county could bring in more money by raising property taxes, a property tax increase would only impact Kanabec County property owners. A county-wide sales tax would mean collecting tax from all those who make purchases in Kanabec County, like seasonal travelers and visitors.
This locally collected tax applies to the same items and services as the state general sales tax.
Based on 2017 taxable sales information from the Minnesota Department of Revenue, the sales tax would generate an estimated $300,000-$330,000 each year.
All but one of the counties surrounding Kanabec County have implemented a 0.5% transportation sales and use tax since 2016.
Mille Lacs County - implemented Jan. 2017
Pine County - implemented Jan. 2017
Isanti County - implemented July 2019
Chisago County - implemented April 2016
Aitkin County - no transportation tax
The Kanabec County Board of Commissioners can implement the tax without a public vote.
Before implementing the tax, the board must hold a public hearing which will be held at 10 a.m. Monday, Sept. 30 in the County Board Room, Kanabec County Courthouse, 18 North Vine Street, Mora.
$10 million bond
Current interest rates as low as 2.08% have also spurred the Kanabec County Board of Commissioners to consider issuing up to $10 million in general obligation bonds to be used for transportation infrastructure. Commissioners have discussed the possibility of borrowing $10 million and using it to address big transportation projects quickly, versus waiting for money to come in from other sources.
According to George Eilertson of Northland Securities who presented information to the board, if the county implemented the transportation sales and use tax, it could be used to cover just over half of the bond payments. The other half of the bond payments could be paid through the county’s wheelage tax, state aid or a property tax increase. The property tax impact would amount to approximately $47 an on a residential property with a $200,000 market value.
The board of commissioners can issue up to $10 million in general obligation bonds without a public vote.