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Sales tax adding up [UPDATED]

Published 7:53am Monday, January 14, 2013 Updated 9:54am Monday, January 14, 2013

Through the first 11 months, sales tax collections for the new community arena in Fergus Falls are slightly below projections, but still on track.

Total revenues on the half-cent sales tax within Fergus Falls city limits collected between January 1, when the tax began, and November were $985,000, with $80,000 collected in November. December’s numbers were not yet available.

The city initially projected $1.3 million in sales tax revenue annually, but it seems unlikely revenues will come in that high. December would seemingly be one of the highest months due to Christmas sales; however, sales taxes in November — which also would seem to benefit from holiday sales — were slightly lower than all months other than January and February.

Even if December’s revenues are closer to the $90,000 to $100,000 of previous months, the amount collected in 2012 would more than enough to cover the city’s obligations, according to city finance director Bill Sonmor.

The city issued a $4 million bond to pay for its share of the community arena, which must be repaid with interest in five years.

“It’s coming in as expected, and if it keeps coming in like this we should have no trouble (paying the bonds),” Sonmor said.

The city collects sales taxes on any product that consumers pay state sales taxes on. The city based the bond structure on sales tax estimates determined by city and state officials. Sonmor said the city budgeted $905,000 in sales tax revenue for 2013, which he considers the lowest amount needed to service the arena bond.

“That’s why I feel pretty confident that things are going to go well,” Sonmor said. “It’s nice to see everything come in the way it was planned.”

On the private donation front, the city has so far received about $1.92 million, about 55 percent of the $3.5 million pledged to build the $7.5 million arena. Sonmor said he felt the private donations are coming in as or better than expected, since many of the pledges were to be paid for five to 10 years.

“The donors are being great,” Sonmor said. “They’re really stepping up to the plate. They appear to be paying early.”



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