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Ice arena sales tax begins this fall [UPDATED]
Published 10:55am Thursday, July 21, 2011 Updated 10:55am Thursday, July 21, 2011The city of Fergus Falls has been playing the waiting game for months with its half-cent local option sales tax for the ice arena, but now that it has been passed by the state Legislature, the time has come to take the next step.
Once the tax is enacted, explained Finance Director Bill Sonmor, the entire process will be handled by the state Department of Revenue. The tax will likely begin in the last quarter of the year.
“We have to give the Department of Revenue at least a three-month notice that it’s been enacted so that the (department) can get that in place, and then they will actually contact all of those (local) businesses and give them instructions on it,” he said. “The (department) will send their collections to us on a monthly basis.”
Sonmor added that no new items, like food or clothing, will be hit with the tax.
“Whatever is taxable now is taxable under the local option sales tax,” he said, adding that motor vehicles will not be taxed under the plan.
The sales tax is expected to last for about four and a half years. If the city raises enough money to pay off its ice arena bonds earlier, then the tax will end earlier.
Sonmor emphasized that the tax is legally required to end, or “sunset,” after the ice arena funds have been raised. Once the funds have been raised, the Department of Revenue will notify businesses to stop enforcing it.
Though some council members have expressed interest in using a local option sales tax to pay for other city building projects, like a new police station or a library expansion, Sonmor said the current tax cannot legally be extended to fund anything besides the ice arena.
“It has to sunset and has to be stopped for a minimum of one year,” he said, “so it has to go away for at least a year before you go back to the public and say, ‘Do you want to pay for another project?’”
Voters would then have to approve the tax all over again, as they did in the 2010 elections.
Though the city has pledged $4 million to the project, the tax allows the city to raise up to $6.6 million for the project. Sonmor said that number allows for interest rates on the bonds and also provides the city with a little bit of leeway in case some of the private donors don’t come through with their donations. The city has not yet issued bonds for the projects.
The city will keep a close eye on the effectiveness of the sales tax. If it works well, a similar tax may be examined in the future for other projects.
“I think certainly the potential is there,” Sonmor said, deferring to the council’s judgment.
The tax will charge a half cent on the dollar for a purchase, in addition to the current sales tax. For example, if an item costs $50, the arena tax would add an extra 25 cents to the price.
Awesome. Another reason to shop in Alexandria.
Anitra….make sure you drive a vehicle that gets great mileage to save your quarters. This sales tax should have been set up for future projects as well. Fergus Falls needs alot of help to become a growing community! This sales tax would help in so many ways.
Just to reinforce Jerry’s point with some numbers –
It’s a 120 mile round-trip to Alexandria. If we are generous and assume a 30 mpg car is driven (fat chance), that’s 4 gallons of gas. At the current going rate of $3.67/gallon, that’s $14.68 just to go there and back.
To recover that cost through the savings on the half-cent sales tax, you’d need to spend $14.68/0.005, or $2936. If your shopping trips to Target routinely cost that much, I don’t think an extra $15 will make much of a difference.
For as crazy as the whole ice arena fiasco has become, to suggest spending your money elsewhere simply because of this tax is even crazier.
My only Fear on this is that the City Council will once again train wreck a proposal through and pass it, and then once again give us the option of paying through a sales tax or property taxes.
They have proved in the past that they do not care what we as citizens think, they have proven that they will do what they want, and force us to pick the lesser of two evils on how to pay for it.
Until we act and come together as citizens of this city, and petition and force the city council to come to voters for any spending bill over 1 million dollars, we absolutly have no control over special interest groups and what special interest projects they will want in the future.
i too will be going else where to do my shopping but not to save half a cent but because i refuse to support another ice area when they could of saved money and upgrade the one already here or maybe the should of built a youth center to keep the teens in this town out of trouble and off drugs.
Isn’t that one of the advantages of the ice arena? Give youth something constructive to do, whether it is hockey, figure skating or open skating? I do not buy into complaint that there is nothing for kids to do in Fergus. The City offers a wide variety of activities through Park and Rec and things like the skatepark, the school offers over 100 activities for students, the organized sports clubs (Youth Soccer, Youth Football, Youth Basketball, Youth Swimming, Youth Baseball, I know I am missing a few) have many opportunities, church’s offer youth groups, and clubs like 4H, Young Life, Scouts, Camp Fire etc… In some ways the problem is we offer too many things for the youth to do and not enough youth to make all of them successful.