Little Falls will wait until next year to ask the state Legislature to put a local option sales tax on the ballot for the 2024 election.
Tuesday, the City Council, along with City Administrator Jon Radermacher, weighed the pros and cons of making a request to the state this year or next. It ultimately decided waiting until 2024 did not come with any apparent risk, and it would allow for more time to come up with a more definitive plan for the potential funding.
In 2022, the Legislature approved a request from the city to place a referendum on the 2022 election ballot asking for $17 million over 30 years via a half-cent local option sales tax on all qualifying purchases made within the city of Little Falls. The goal, at the time, was to fund a proposed community recreation center.
It ultimately decided not to ask the question in 2022 because, due mostly to inflation, the cost of the project grew to about $30 million. The city’s request to the Legislature to ask for a higher amount never received a vote in St. Paul.
“I think, just personally looking at it, I don’t think we have the time to do a really good job to get this thing pushed for 2023,” said Council Member Frank Gosiak. “It doesn’t mean we can’t discuss it throughout the year. If we’re going to do it right, we have to go on the next one.”
In opening the discussion, Radermacher said his research shows that, based on Morrison County’s collections on its local option sales tax in recent years, Little Falls would generate $1.4 to $1.5 million annually. In total, he said the county has been collecting about $2.2 million per year, more than 50% of which comes from purchases made in Little Falls.
The city’s initial ask for $17 million was reflective of a study completed by the University of Minnesota Extension using 2016 numbers. That estimated, conservatively, that it would only collect about $530,000 per year. It also did not take into account sales tax collected on online purchases.
“We’re well above that $530,000,” Radermacher said. “The county was projected to collect like $900,000, and they’re well above that. Now, with that online sales portion, I think it’s a lot healthier.”
During the last few months, the City Council has also started a discussion to upgrade its facilities, namely City Hall, the Police Station and the main Fire Hall. Part of those discussions have included how such a project would be funded.
The city could ultimately borrow for up to 40 years through a program funded by Rural Development. However, it would most likely look to start at 35 years and leave some flexibility to ask for another five years in the event of an unforeseen major expense.
“The question becomes, if we’re going to get the Legislative authorization to ask for the ballot question for a local option sales,” Radermacher said. “At this point, I wanted to kind of put a pin in what projects, not specifically rec center or City Hall and/or anything else. But, if we’re going to move toward getting authorization, we have to submit documentation and pass a resolution by Jan. 31 this year.”
The earliest the measure could come to a vote among residents of Little Falls would be November 2024.
As such, Radermacher said the city could go into the 2024 Legislative session with a more specific direction for the funds before it makes the request. Some of those details would include updated cost estimates and a target date for construction.
“There’s no — if we don’t get it in by now — there’s really no specific risk in terms of time,” he said. “It’s not going to change when the ballot question’s going to happen. The ballot question’s going to happen in 2024.”
Council Member David Glaze asked Radermacher for his opinion on whether it would be wise to move forward this year or to wait. Radermacher said someone who he “highly respects on this,” told him the biggest risk in waiting is if the Legislative session wasn’t completed in 2024.
He does not believe there’s any risk in terms of the Legislature approving the projects as a viable use of the potential funding, because they meet the key qualifier of holding “regional significance.”
“I think that’s just a formality,” he said. “We already know our rec center did once, it got approved, so we know that it could get approved again. They don’t really balk at the dollar amounts. They don’t tell you, ‘You’re shooting way too high,’ or ‘You’re shooting way too low,’ anything like that. They don’t really have a whole lot of say.”
Radermacher said he would feel “very comfortable” waiting until 2024.
He added that there is a possibility the city could ask to fund the proposed rec center and a portion of the government center with the local option sales tax. Both projects would meet all requirements by the state.
“Originally, this was brought up to (fund) the community center,” Glaze said. “Now I see you added in the government center. I’m not against that. Will we make sure that the community center got done first before, and any left over would go to the government center? I think that would be right.”
Radermacher said that would be the case. The community recreation center would be the top priority for funding through the tax. The remaining balance would then go toward the government center or any other project the city might want to include in the request.
In terms of exploring other projects, Glaze asked if the much-discussed splash pad could be included. Radermacher said there is money in the city’s budget reserved for that project already, and it is scheduled for construction this year.
Council Member Raquel Lundberg noted the city has been setting aside money for that “for several years.”
“That’s going to serve us really well, too, because it helps with the water flow in that northern area of town,” Radermacher said.
Glaze, who is new to the Council this year, said his biggest concern is making sure the community center gets done. Radermacher said, by discussing the possibility of including the government center in the local option sales tax request, he was by no means suggesting that project take priority for the funding.
Council Member David C. Meyer, who is also new to the Council, asked if there was any flexibility in the funding. For example, if there was money left over after the community center and government center were funded, could the sales tax go to projects that were not listed in the request. Radermacher said it could not.
“The one item that kind of popped into my head in this discussion, and I know it is going to be brought up more with the Food Policy Council that’s in the works, in the process of being developed, is a pavilion or structure for the farmer’s market,” Radermacher said. “I know we’ve talked about that in conjunction with the bandshell and trying to do something like that at Le Bourget Park.”
Radermacher said there is opportunity in waiting. It is possible to gain support throughout the community by adding additional projects into the funding request. Not making the ask to the Legislature will allow for more time to gather community input on projects people would like to see included.
“I would feel better about it if we engaged the community more about what those additional projects could be, if we’re going to add anything else to the list,” he said.
Later in the conversation, however, Glaze said he was against waiting until 2024. Lundberg reminded him that the Council would still have from January 2024 until November 2024 to do community outreach, even if it waits.
“But you have a whole year starting in January to start doing that now,” Glaze said. “That’s a lot more time.”
“There’s a lot of engagement that we can do without a resolution being passed,” said Council Member Leif Hanson said. “The public knows the concept that’s out there.”