Renville County discussing local option sales tax to combat rising road maintenance costs
The Renville County Board of Commissioners opened discussions on a local option sales tax to raise funds for transportation needs. The west central Minnesota county has bonded to increase road funding, but it is not keeping up with needs.
OLIVIA — Renville County is exploring the possibility of a local option sales tax to help fund its road and bridge needs.
The County Board of Commissioners began the first tentative discussions on the possibility at its meeting Tuesday. Board Chair Randy Kramer urged the board to consider the possibility, although he acknowledged he is not necessarily ready to support it.
“Just wanted the discussion, not 100 percent for it,” Kramer said.
He noted in discussions that he favored a local option sales tax over the wheelage tax already being implemented in the county. The wheelage tax is regressive, he said, as it imposes a flat $10 fee per vehicle, no matter its value.
Commissioners Greg Snow, Doug Erickson and David Hamre all expressed some concerns about adding to the tax burden, but also voiced support for more revenues to meet transportation needs.
The county awarded $13.8 million in bonds in 2020 to help meet road improvement needs. The county has plans for $54.1 million in road and bridge work in the years 2023-2027, but the commissioners expressed concerns the county is not keeping up with its needs.
“I drove over here on county roads,” Hamre said of his trip to the county office building in Olivia for the meeting. “Every day I’m thinking, ‘oh my,’ we are so behind.”
During the discussions, commissioners noted that a local option sales tax would collect revenues from both county and non-county residents when they make purchases. A portion would come from online sales.
Kramer pointed out that county residents are now paying local option sales taxes when they make purchases in many out-of-county locations, such as Willmar, Hutchinson and New Ulm.
Wheelage and local option sales taxes are options for transportation funding that do not impact property taxes. Snow said the board has discussed the possibility of raising the levy to help meet the county’s road needs, even though commissioners do not want to do so.
The county currently collects $190,000 a year from the wheelage tax, according to information provided the commissioners. The Minnesota Department of Revenue indicated that a 0.5% local option sales tax would have generated $320,000 for Renville County based on 2019 actual taxable sales.
County Administrator Lisa Herges said she will inquire with a University of Minnesota staff member about a possible assessment to determine how much revenue the county could receive in future years, and how much of it would be generated from non-residents.
If a local option sales tax is to be adopted, the county must hold a public hearing and identify the transportation projects that would be funded by the revenues.
Kramer noted that it would be important to let residents know the local option sales tax is being considered to raise additional funds for transportation needs, and that the levy would not be reduced.