Month: August 2020

The State of Minnesota informed county highway departments in July that they are anticipating a 15 percent reduction in County State Aid Highway (CSAH) funds for 2021.  In Polk County, that represents a $1.5 million reduction, including $600,000 in maintenance funds.

Polk County Highway Engineer Rich Sanders is proposing the County Commissioners add a Wheelage Tax of $20, which can be used for maintenance, and a .25 percent increase to .5 percent in the Local Option Sales Tax for construction. Sanders says most counties in the state outside of the metro area and Stearns County already have a .5 percent Local Option Sales Tax. “If you look at our funding, we’re going to lose about 15 percent of our County State Aid Highway funding in 2021 because of COVID,” said Sanders. “I need to make up about $600,000 in maintenance funding, and $900,000 in construction funding to make us whole. I proposed to them to increase the local option sales tax from .25 to .5 percent. That’s where 90 percent of the counties have theirs at currently. Only a couple of metro counties and Stearns County have it at .25 percent. Then to do a $20 wheelage tax which would help us because the wheelage tax could be spent on maintenance items such as our gravel road stabilization projects, crack filling, and stuff like that.”

Commissioner Gerald Jacobson voiced he was adamantly against increase either option for generating highway funds. Sanders said the other option to make up his shortfall would be through an increased property tax levy request. “If we don’t do those, we’d be looking at a $1.5 million levy increase to cover those costs or delaying projects,” said Sanders. “The problem is, how do you delay maintenance? You really can’t. We’d have to make up that $600,000 somewhere which would have to be property tax increases.”

Commissioner Don Diedrich requested Sanders compile information on the county’s current highway property tax levy per mile compared to neighbors Marshall and Norman County. Sanders said he’d put that together for the next board meeting, and County Administrator Chuck Whiting told the board it’s ultimately their decision on how to proceed. Still, the staff will present them with the information they have and whatever information they needed. Sanders also asked the board to email him any other questions or information they wanted so he could have it ready for the next meeting.

Sanders said losing construction funds for one year isn’t an issue, but a one-year delay means all projects in the next 20 years are likely delayed one year. “If we lose $900,000 or $1 million in construction funding, we have to delay that amount in project,” said Sanders. “That’s not the best because a lot of our projects are overlays on roads where the pavement is starting to show distress. To delay them one year wouldn’t be an issue. The problem is you’re delaying every year for the next 20 years if you don’t get that funding.”

Sanders also told the board that the increases would serve a purpose beyond just 2021. Currently, Polk County doesn’t have a source of funds for bridge replacement projects in Nielsville, Climax, and along CSAH 1 between Fertile and Winger. “The other things is we need to find a source of funds to start building a nest egg for our part of the Nielsville project, Climax Bridge, and two bridges between Fertile and Winger,” said Sanders. “Other projects out there, grading of gravel roads that haven’t been graded in 60 years that need to be re-graded.  All those projects cost money, and we have to be able to find the money somewhere to get those projects done.”

Sanders added that two years ago, a project list (below) for the local options sales tax had 48 years of projects before the tax would end, an increase of .25 percent would shorten the timeline on those projects and the tax’s lifespan to just over 15 years. “Currently, as part of the local options sales, we had to provide a list of projects that would be funded through that tax,” said Sanders. “The list of projects I presented to the county board two years ago when we adopted it we’ve done some of the projects on. If we kept the tax at .25 percent, it would take us 46 years to complete those projects. If we add to the local options sales tax up to .5 percent and the wheelage tax at $20, it will take us 15 years to complete those. If you look at inflation and everything that goes into the money and being able to do these projects, it’s always better to do them quicker because the price isn’t getting inflated every year that you don’t do it.”

With inflation, and the ability to shorten the lifespan of the tax, Sanders said it only makes sense to him to have the increase. “To me, it only makes sense to do the local options sales tax at .5 percent, and the Wheelage Tax at $20 because once these projects are done, the tax goes away,” said Sanders. “You’re either going to have it for 46 years, or you’re going to have it for 15 years. Right now, they are just starting the discussion, and we’re hoping to finalize at the end of August.”

A decision has to be sent to the State of Minnesota by August 31 for changes in 2021.

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