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Hospitality tax included in House bill

BEMIDJI – A bill allowing the city of Bemidji to impose a hospitality tax cleared a major hurdle Wednesday night.

That’s when the House Taxes Committee passed its omnibus tax bill with the hospitality tax provision included. It now heads to the Ways and Means Committee before hitting the House floor, potentially next week.

 “Any other action on this would come on the House floor, most likely,” said Tim Flaherty of the firm Flaherty & Hood, P.A., which the city hired as its lobbyist on the tax. “And I’m really not expecting any floor amendments on this issue either, but you never know.

“So I think it’s likely to pass on the House floor, and then we’ll take it from there (and) see where the Senate is.”

The bills, authored by Rep. John Persell, DFL-Bemidji, and Sen. Tom Saxhaug, DFL-Grand Rapids, would allow the city to impose up to a 1 percent tax on customers’ bills at restaurants and hotels in the city. The money would go towards operating expenses, maintenance and capital improvements at the Sanford Center.

The city budgeted for a $400,000 subsidy for the facility’s operations in 2013. The city council passed a resolution April 8 stating it would reduce the city’s portion of the property tax levy by $400,000 otherwise needed for the Sanford Center should the hospitality tax pass.

That same night, they agreed to pay Flaherty & Hood a flat $5,000 fee to see the bills through some crucial stages at the Legislature.

Flaherty said he didn’t expect the Senate’s omnibus tax bill to be released until next week.

“The general trend in the Senate for many years has been that these bills require local community support, not just the elected bodies, but the business community,” Flaherty said.

As of early April, the Bemidji Area Chamber of Commerce hadn’t taken a formal stand on the bill, although some individual business owners have vocally opposed it. Visit Bemidji has remained neutral. 

The bill has faced opposition from the statewide association of convention and visitors bureaus, mainly because it uses lodging tax dollars for something other than tourism marketing.

Meanwhile, a provision to reform the Local Government Aid system is also included in the large tax bill passed out of the House Taxes Committee Wednesday.

That bill, authored by Moorhead DFLer Rep. Ben Lien, is supported by the three main associations of city groups, including the Coalition of Greater Minnesota Cities, which Flaherty & Hood represents. It marks a rare sign of cooperation between greater Minnesota and metro cities on LGA issues.

The bill includes an extra $80 million in LGA funding next year, as previously proposed by Gov. Mark Dayton. For Bemidji, it would mean $3.2 million in LGA from the state next year – up from $2.9 million this year.

“I think, in our view, it’s very major accomplishment, if it actually becomes law,” Flaherty said. 

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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