County keeping an eye on a tax bill

Talk about it

Washington County is paying close attention to a bill that is moving through the state Legislature that would allow counties to add an extra half-cent to the sales tax to make up for losses in state aid.

County administrator Jim Schug informed Washington County commissioners during their April 7 board meeting of the latest on the bill, which is currently circulating the Minnesota House and Senate.

“It’s getting a lot of attention,” Schug told commissioners. “(The proposed legislation) is still alive and something the county board may be asked to lobby on if it continues to go through the legislative process.

“And if it’s moved, the county board would obviously have to make a decision about replacing county program aid with county sales tax.”

Under the proposal, which was drafted in the House by Rep. Paul Marquardt, DFL-Dilworth, counties would be given authority to levy a half-cent sales tax in addition to sales tax that already exists.

The half-cent sales tax increase would help offset more than $200 million in state aid cuts to cities and counties. The goal of the bill, its sponsors say, is to help make up for a $4.6 billion shortfall in the state budget.

Supporters say the bill will allow counties to use the tax to provide services that would normally be paid for with state aid while holding the line on property taxes. Gov. Tim Pawlenty and Republican leaders in the House have said they oppose the legislation as another way to raise taxes.

The bill is scheduled to get an April 16 hearing in the House Taxes Committee.

Commissioners didn’t take an official position on the legislation, but discussed the positives and negatives of the bill should it make it through the legislature and a veto by the governor.

“On the positive side, if (a half-cent sales tax increase) was implemented by the counties and went back to the counties then we have a little more power to decide how these funds would be spent,” said commissioner Dennis Hegberg.

He added that one of the negatives would be if the state would later decide to place mandates on what the counties would have to fund with the sales tax increase.

County board chair Myra Peterson asked administration for legal opinions on the legislation.

“I want some assurance that if we’re forced into this position that we have control over the programming and longevity of it,” Peterson said. “Otherwise I think it is a way to take the responsibility of the Legislature and place it on us.”

Currently the state sales tax rate is 6.5 percent. One year ago, Washington County commissioners approved a county-wide quarter-cent sales tax increase to be dedicated to transit improvements in the metro area as a part of a joint powers agreement with four other counties.

Forum state capitol correspondent Don Davis contributed to this report.

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