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Council OKs steps to retire Willmar, Minn., local sales tax

WILLMAR -- The Willmar City Council is beginning the process of terminating and repealing the city's half-percent local option sales tax.

The council voted Monday night to notify the Minnesota Department of Revenue that the seven-year tax will be terminated on Dec. 31.

Further, the council voted to set a public hearing Oct. 1 to consider an ordinance that would repeal the ordinance the council previously passed to enact the sales tax.

Both actions were recommended by the council's Finance Committee.

The half-percent sales tax was approved by voters in 2004; was approved by the Legislature in 2005; and went into effect Jan. 1, 2006.

Along with the sales tax, the enabling legislation allowed the city to collect a $20 excise tax on local motor vehicle sales.

In an interview before the start of the council meeting, City Finance Director Steve Okins said the repeal ordinance is needed primarily to clean up the municipal code.

The council passed an ordinance establishing the tax, and an ordinance is required to remove it from the municipal code.

"Even though there was state statute that gave the city the authority to implement the tax, there had to be local action,'' he said.

Okins said the city will still notify the state, which in turn will notify all retailers in the city to change the sales tax on their cash registers, effective Jan. 1, 2013.

The seven-year tax was proposed to pay off an estimated $8 million in debt to be issued to finance four city projects: redeveloping the old airport into an industrial park; hiking and biking trails; the purchase of 60 acres of undeveloped state land north of Willmar along U.S. Highway 71; and connecting the Civic Center and the Blue Line Center.

Cost estimates for all projects were based on being shovel-ready at the start of the tax.

"Naturally to pay off $8 million in debt, you would have had to collect more than that,'' he said.

No debt was ever issued to finance the projects, however, because the Minnesota Department of Aeronautics did not release the old airport land to the city until recently for development into a new industrial park. The industrial park project carried the largest price tag.

In the meantime, the council decided to pay cash from the authorized tax collections for the Blue Line-Civic Center connection and for trail projects. Issuing debt was not necessary.

As of the end of 2011, the sales tax has collected a little over $10 million, according to figures released by Okins.

He said there will be discussion at the next council meeting on total collections, where the money has been spent, the fund balance and projections of where unspent funds will be allocated.

During the open forum Monday, the Tribune was both criticized and praised for a story published Friday in which council member Doug Reese said that continual questioning by council members and Mayor Frank Yanish of decisions and recommendations made by City Administrator Charlene Stevens and department heads is demeaning.

Reese advised the mayor and council to stop questioning and start listening to the city administrator and department heads whom Reese described as the city's experts.

John Sullivan criticized Reese for making comments to the Tribune that Sullivan said should have been made in private at a city workshop.

Sullivan also criticized the Tribune's Saturday editorial, which cited dysfunction on the council and the need to develop leadership for the betterment of the community. Sullivan said the Tribune should cite examples if the items in the editorial are to be taken as fact.

Sullivan said both Reese and the Tribune "are saying that the current council and mayor are of a demeaning character towards the staff and ask too many questions.'' Sullivan said the city has a very capable council and mayor and very capable staff.

"Should they be asked questions? Yes. They need to do this to learn the situation and how it will affect the community and their monies,'' Sullivan said.

Also, Sullivan said Reese has served Willmar for more than 26 years with grace and dignity, but Sullivan said, "This is a sad commentary to end your tenure with.'' Reese is leaving the council and is running opposed for a seat on the Kandiyohi County Board.

Jerry Gesch praised Reese for his comments and suggested other council members should follow Reese's example and talk to the city administrator or department heads first if council members have questions about staff decisions and try to get an understanding.

Gesch said micromanaging in front of the public is not the thing to do. He said there is a "time and place how you have to go in front of the public.''

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150