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Bemidji, other cities, seeing increase in sales-tax collections

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Cities throughout Minnesota are seeing an increase in their local sales tax collections - and Bemidji is no different.

Locally, in fact, Bemidji is among a handful of cities that have even higher-than-average collections.

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The Pioneer obtained information from six cities throughout the state that have a local sales tax in place.

All reported that they are on pace for an increase this year:

E Baxter is up 1.45 percent.

E St. Cloud is up 1.5 percent.

E Duluth is up 1.84 percent.

E Bemidji is up 8.4 percent.

E Austin is up 9.4 percent.

E Rochester is up 14.66 percent.

"This would be the first increase in three years, after decreases the past two years," St. Cloud Finance Director John Norman said in an e-mail.

Owatonna and Willmar did not respond to a request for information.

Bemidji has a half-cent sales tax in place to raise $9.8 million toward parks and trails improvements. Once that figure is reached, which is expected around December 2011, the half-cent sales tax will continue. Then, it will be used to pay back $44 million in bonds for the south shore redevelopment.

Cities have figures available for their sales tax received through June of this year.

For Bemidji, the increase from last year is relatively new. The city was down, cumulatively, 6 percent in January and 5 percent in February. It got on the positive side in March, when it went up to 2.5 percent. Since then, the city has made gains to 4.1 percent, 5.9 percent and, now, as of June, 8.4 percent.

Bemidji Finance Director Ron Eischens said he had been planning for a moderate increase and did not expect to see the increase that he did.

"I certainly am surprised," he said, "Pleasantly surprised."

Eischens said he had anticipated smaller gains. At this time last year, the city had more residents because of visiting pipeliners.

Bemidji's sales-tax collections were down in 2008 from 2007 but went up 5.2 percent in 2009.

"I thought last year was strong because of the pipeliners," Eischens said.

The reason for the recent increase, obviously, is that people are simply buying more taxable goods.

But, when asked if he could speculate about whether local residents are buying more stuff or if more regional residents are coming to Bemidji to shop, Eischens laughed.

"I wish I knew the answer," he said.

Taxpayers benefit from having higher collections, although the affect is not immediately transparent.

"The advantage to having an increase in sales-tax (collections) to the city will come into play when we start using it to pay down the ... bonds," Eischens said.

Bemidji will continue to collect the sales tax for the parks and trails improvements. Once the $9.8 million is raised, the sales tax will go to pay down the bonds used to purchase the south shore property and develop the Bemidji Regional Event Center.

While there is no real difference in whether the parks funds are raised in two or three more years alone, the benefit is evident as soon as the money can be used toward the bonding expenditures, Eischens said.

"If we pay off the parks and trails sooner, we have more funds available to pay down the $44 million sooner," he said. "It will be less likely, then, that we would need other revenue sources for that $44 million."

The financial risk to the city, then, is lower, he said.

Cities throughout Minnesota are seeing an increase in their local sales tax collections - and Bemidji is no different.

Locally, in fact, Bemidji is among a handful of cities that have even higher-than-average collections.

The Pioneer obtained information from six cities throughout the state that have a local sales tax in place.

All reported that they are on pace for an increase this year:

- Baxter is up 1.45 percent.

- St. Cloud is up 1.5 percent.

- Duluth is up 1.84 percent.

- Bemidji is up 8.4 percent.

- Austin is up 9.4 percent.

- Rochester is up 14.66 percent.

"This would be the first increase in three years, after decreases the past two years," St. Cloud Finance Director John Norman said in an e-mail.

Owatonna and Willmar did not respond to a request for information.

Bemidji has a half-cent sales tax in place to raise $9.8 million toward parks and trails improvements. Once that figure is reached, which is expected around December 2011, the half-cent sales tax will continue. Then, it will be used to pay back $44 million in bonds for the south shore redevelopment.

Cities have figures available for their sales tax received through June of this year.

For Bemidji, the increase from last year is relatively new. The city was down, cumulatively, 6 percent in January and 5 percent in February. It got on the positive side in March, when it went up to 2.5 percent. Since then, the city has made gains to 4.1 percent, 5.9 percent and, now, as of June, 8.4 percent.

Bemidji Finance Director Ron Eischens said he had been planning for a moderate increase and did not expect to see the increase that he did.

"I certainly am surprised," he said, "Pleasantly surprised."

Eischens said he had anticipated smaller gains. At this time last year, the city had more residents because of visiting pipeliners.

Bemidji's sales-tax collections were down in 2008 from 2007 but went up 5.2 percent in 2009.

"I thought last year was strong because of the pipeliners," Eischens said.

The reason for the recent increase, obviously, is that people are simply buying more taxable goods.

But, when asked if he could speculate about whether local residents are buying more stuff or if more regional residents are coming to Bemidji to shop, Eischens laughed.

"I wish I knew the answer," he said.

Taxpayers benefit from having higher collections, although the affect is not immediately transparent.

"The advantage to having an increase in sales-tax (collections) to the city will come into play when we start using it to pay down the ... bonds," Eischens said.

Bemidji will continue to collect the sales tax for the parks and trails improvements. Once the $9.8 million is raised, the sales tax will go to pay down the bonds used to purchase the south shore property and develop the Bemidji Regional Event Center.

While there is no real difference in whether the parks funds are raised in two or three more years alone, the benefit is evident as soon as the money can be used toward the bonding expenditures, Eischens said.

"If we pay off the parks and trails sooner, we have more funds available to pay down the $44 million sooner," he said. "It will be less likely, then, that we would need other revenue sources for that $44 million."

The financial risk to the city, then, is lower, he said.

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