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State sales tax expansion would cost Beltrami County more for services

BEMIDJI – An expansion of the state sales tax that would include services purchased will make any reduced rate in Gov. Mark Dayton’s plan virtually obsolete, according to County Administrator Kay Mack.

The county’s purchase of two pieces of highway equipment will result in about $33,000 in sales taxes, according to Mack, but it’s the work the county can’t perform that will bring added costs.

“We hire a good amount of professional services, particularly in engineering, for our highway department,” Mack told Rep. John Persell DFL-Bemidji and Rep. Roger Erickson DFL-Baudette during a conference call between the legislators and the Beltrami County Board of Commissioners Tuesday. “A large county might have enough staff to do their own engineering, but a small county has to hire and it’s taxable. It’s going to have a very significant impact on us.

“All that work you do on Local Government Aid, we probably lose most of that on paying sales tax as part of this expansion.”

Persell agreed.

“It doesn’t make a whole lot of sense for us to fight as hard as we can for (Local Government Aid) and then to turn around and have you send it back to us on sales tax,” he said. “The point’s well-taken.”

District 4 Commissioner Tim Sumner inquired about several bills that would exempt counties from paying sales taxes on services purchased. But Dayton’s plan doesn’t include the exemption, and as it currently stands, Beltrami County would have to pay a 5.5 percent sales tax on those purchases – something Persell said he did not support.

“There’s several other places in the governor’s proposal for raising revenue that I think a number of us aren’t supportive of,” Persell said. “But the fact remains that if we’re going to do the things we need to do for education, health care etc. we’ve got to find some funding to do that with."

Mack said the county would be forced to “levy property taxes to cover the costs of those sales taxes.”

District 5 Commissioner Jim Lucachick spoke in broader terms about what he called “essential and non-essential services.”

“I’m finding as kind of a new person that metro issues and out-state issues are two different things,” Erickson said. “And it’s really hard to balance. ... when they seem to need our votes some of the time and we need their votes all the time.”

In other business:

-- The county approved a contract with EDocument Resources for an the installation of an electronic document management system. Beltrami County would be required to pay no more than $291,200 of the $560,000 contract, with the remainder of funds coming from the Minnesota Department of Health and Human Services.

The company will work to implement a new case filing system for the Beltrami County Department of Health and Human Services, as well as provide training for employees and technical support.

-- Approved an expenditure of up to $12,500 for a project proposal for the Northern Minnesota Veterans Home.

The funds will go to pay for a grant writer to compile a report to be presented to the Minnesota Department of Veterans Affairs. The report will include demographics on northern Minnesota veterans, and reasons why Bemidji should be home to the sixth such facility in the state. Beltrami County Veterans Service Officer Scotty Allison said the report will also include a preliminary architectural design.

-- Approved the appointment of Greg Nelson to an at-large position on Beltrami County Parks and Trails Advisory Committee. Nelson, a former Minnesota Department of Natural Resources forester, will replace Jim Gubbels.

Commissioners Tim Sumner, Jack Frost and Richard Anderson approved the appointment, with only District 5 Commissioner Jim Lucachick voting no. District 2 Commissioner Joe Vene was not present. 

Justin Glawe
Reporting on crime, courts and Beltrami county government. Follow me on Twitter @JustinGlawe.
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