Duluth mayor proposes new sales tax to fix streets

Duluth Mayor Emily Larson launched a campaign Tuesday to sell her city’s residents on a plan that would boost the local sales tax by an additional half-percent in order to fix the city’s deteriorating street system.

“Hands down, the overwhelming complaint I hear from people is about streets, streets, streets,” she said. “People are frustrated.”

“So what we have done is put together this plan, and we think it’s a good one,” Larson said. She has asked the Duluth City Council to put the proposal to a citywide referendum vote in November.

If a solid majority of local voters support the idea, Larson would still need the Minnesota Legislature to sign off on the tax increase, bringing the total cumulative sales tax on most retail purchases in Duluth to 8.875 percent , with state and county charges included.

Duluth already has the highest combined sales tax of any city in the state, with Minneapolis the next-greatest at 7.775 percent.

Nevertheless, Larson hopes people will rally around her plan. She acknowledged the November referendum must send a strong message of local support for the additional sales tax if she is to win legislative approval.

“One doesn’t happen without the other,” she said.

Larson said her plan would generate an estimated $7 million annually that would be earmarked exclusively for roads and sidewalks. The tax could remain in effect for up to 25 years.

To raise a similar amount via property taxes, Larson said the city would need to increase its levy by 35 to 40 percent.

Larson noted that Duluth is a regional center, and its streets are used by more than the 86,000-some people who call the city home. She pointed to the 35,000 people who commute daily to jobs in Duluth from other communities and the estimated 6.7 million guests who visit the city each year.

“The sense in a sales tax is that residents will not have to carry the entire burden of a built environment that literally exists to serve millions of people more,” she said.

The city currently has $2.8 million in its annual street fund, and $1.3 million of that sum goes to pay off bond debt

Meanwhile, 55 percent of Duluth’s 450-mile street system is rated to be in poor condition, using the Pavement Condition Index, an industry standard measure for streets. Only 17 percent of the city’s streets are considered to be in good condition.

Duluth is falling further and further behind on its roads and the costs of catching up are growing exponentially, said Jim Benning, Duluth’s director of public works and utilities. He said maintaining 1 mile of good-quality road costs about $100,000, while reconditioning the same length of road in fair condition with a mill-and-overlay project costs about $700,000, and replacing a same-sized stretch of poor-quality road costs about $2.5 million.

The city has averaged about 3.5 miles of streetwork per year from its available funds, according to Benning. He said about 0.3 miles of that has been used to reconstruct badly degraded roads, and the remaining 3.2 miles has been for mill-and-overlay projects.

“The bottom line is that it isn’t enough,” Benning said.

With additional sales tax revenues, he estimates Duluth could boost its streetwork to about 16 miles in 2019.

Larson plans to present a city budget proposal for the coming fiscal year next week, and she said it, too, will reflect her decision to make street improvements a higher priority. That budget, combined with the proposed half-percent sales tax, would boost the Duluth’s street fund to a projected $10 million.

She cited a study by the League of Minnesota Cities that indicated for every $1 invested to maintain a street in a timely fashion, a community can save $7 in repairs down the road.

“So there is a significant financial return on investment,” Larson said.  

St. Louis County instated a half-percent sales tax of its own in 2015 to pay for road improvements, and Larson said Duluth has been among the beneficiaries. The county has invested $16 million in county roads that run through Duluth during the past three years - more than triple what the city has spent on local streets during the same period.

“They (county crews) are working on projects that could line up beautifully with city projects, but we don’t have the funds to make that possible,” Larson said.

She described the statewide reputation of Duluth’s deteriorating streets as “bordering on infamous.”

Duluth City Council President Joel Sipress voiced his “100-percent support” for Larson’s street plan at a Tuesday afternoon press conference.

“The longer we wait, the more it’s going to cost the city, our taxpayers and our residents. And the longer we wait, the more it’s going to cost all of us in wear and tear on our cars,” he said

Sipress said he had hoped local governments would receive help from federal and state authorities in meeting their infrastructure needs, but that doesn’t look to be in the cards any time soon.

“We can’t let them off the hook. We all need to work for change at the state and federal level, but in the meantime, we have to act, because we know the cost of inaction,” he said.

Larson shared similar hopes but said: “We are tired of waiting for others at the state and federal level to come to our rescue, and that’s not really the Duluth way anyways. Here, we always pride ourselves on finding solutions and getting things done.”

Online

To read Mayor Larson's answers to frequently asked questions about the proposal, go to duluthmn.gov/better-streets/faqs .

Voice your opinion

Three public “State of the Streets” meetings to discuss Mayor Larson’s proposal are planned in the coming weeks:

• Wednesday, Aug. 16, 5:30-7 p.m. at Harrison Community Center, 3002 W. Third St.
• Wednesday, Sept. 20, 5:30-7 p.m. at Morgan Park Community Center, 1242 88th Ave. W.
• Thursday, Oct. 26, 5:30-7 p.m. at Duluth Heights Community Center, 33 W. Mulberry St.