Beltrami County ponders ½-cent sales tax increase to help fund repairs
BEMIDJI — Residents of Beltrami County have been rumbling about the roads crumbling for years, and officials are exploring a possible sales tax increase to help pay for repairs.
Beltrami County Administrator Kay Mack and highway engineer Bruce Hasbargen presented the Beltrami County Board of Commissioners with a proposed half-percent sales tax increase at Tuesday’s board meeting.
Commissioners will make a decision on raising the tax following a public hearing at the Dec. 3 board meeting. A series of road improvement information meetings will be held before that hearing.
"Insufficient level of funding has resulted in a situation in which roads are literally crumbling and citizens are putting pressure on the county board to address the issue," Mack said.
If passed, every dollar spent in Beltrami County would have a half-cent tax tacked onto it that would be dedicated to county road maintenance and construction.
It would cost $80 million to get all 401 miles of county roads up to good standing, officials said.
Fortunately, the majority of roads do not need to be completely overhauled: 179 miles need a seal coat, 15 miles need an overlay, 56 miles need mill and fill, 118 miles need to be removed and resurfaced, 21 miles need complete reconstruction and 12 lone miles are not in need of repair.
Roads that need reconstruction are generally not wide enough and can pose a safety hazard.
"We have some county highways that are in great condition," Mack said. "You have to get out into the rural areas to see just how bad some of them are."
County Road 5 has been described as "patches on patches," Hasbargen said. "County Road 9 is an example of where we’re keeping the good roads good."
County roads are funded in part by the county property tax levy. If the half-cent sales tax increase is not approved, the property tax levy may need to be raised 7 percent.
"If we add a $1.2 million bond payment, to what we are currently levying, that would cause a 7 percent increase in property tax levy," Mack said. "We couldn’t make these debt service payments off of pure levy."
County State Aid Highway (CSAH) funds, federal dollars, payment in lieu of taxes funds and specific project grants have been other sources of funds for construction projects.
"In the highway department our biggest source of funding is CSAH dollars," Hasbargen said.
Hasbargen said Beltrami County receives roughly $3.4 million in CSAH funds each year, which is falling short of the county’s needs despite the fact that funding has increased about 35 percent the past 10 years. According to Mack and Hasbargen’s presentation, construction materials costs have increased 70 percent in that timeframe.
Mack said the state granted counties the authority to pass a sales tax because it acknowledges that counties are in a bind when it comes to roads.
Commissioner Richard Anderson said he thinks the sales tax is a better option than bonding or keeping the wheelage tax.
"I realize that (sales tax) was a solution to a problem we’ve been faced with for a long time. I see it as a win-win for our citizens that we get roads done and it’s not totally on their backs," Anderson said.
Mack said if the half-cent sales tax is adopted, the wheelage tax would be eliminated; however the wheelage tax will likely be in place through 2014.
Commissioner Joe Vene said the message he’s been getting from constituents is to fix the roads.
"I think we’ve reached a point where doing nothing is not an alternative," Vene said. "It’s time we take the bull by the horns and do what needs to be done."
Not all commissioners are sold on the idea of implementing another tax.
"I need to be sold on this. I’m not one to jump into a taxing scenario," said commissioner Jack Frost.
Commissioner Jim Lucachick suggested the level of money in the county’s reserve fund be reconsidered. The county keeps $6 million in reserves, which Mack said will definitely be used, but it’s not enough.
"It’s just more taxes. I don’t support it. I won’t support it," Lucachick said.
Another option is to bond for the money to fix the roads, but the county is still paying on bonds used to build the Judicial Center and Law Enforcement Center. The Judicial Center bond is scheduled to be paid off in 2025; the Law Enforcement Center in 2023.
Mack said that even at an attractive interest rate, the county would still be paying $1.9 million in interest. The sales tax increase would generate an estimated $2,073,259 annually.
"If we’re going to get these roads taken care of we need revenue," Mack said.