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Duluth says yes to sales tax to fund street improvements

Duluth mayor Emily Larson announces the results of a referendum to raise the sales tax to fund street repairs during an election party at Lyric Kitchen-Bar in Duluth Tuesday evening. Clint Austin / caustin@duluthnews.com1 / 2
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By a resounding margin, the voters of Duluth voiced their support Tuesday for a proposal to increase the local sales tax in order to fund street improvements.

Preliminary results showed supporters of the referendum outnumbering opponents by more than three to one. About 32 percent of registered voters in Duluth cast ballots.

Duluth Mayor Emily Larson proposed the tax, which if approved is expected to generate about $7 million per year.

The city of Duluth has fallen behind on street repairs in recent years, after a pre-existing casino revenue-sharing agreement with the Fond du Lac Band of Lake Superior Chippewa was deemed unacceptable by regulators and the courts. Duluth had leaned heavily on that revenue stream — about $6 million per year — to fund its street program. But now it’s gone.

“This tells me that we were correct in the understanding that this is a priority issue for residents,” Larson said of the referendum results.

“I had some win numbers in my head, and I am an optimist. … And this has exceeded my expectations. But I’m still not surprised. This does resonate with what people told me was important to them, and it makes me so glad that we’ve spent the past three months having a community conversation about streets,” she said.

Under Larson’s plan, all the proceeds from the prospective sales tax would be placed in a dedicated fund to be used only for streets.

Despite Tuesday’s referendum, Duluth voters won’t have the final say on whether to increase the local sales tax. Any such increase will need to win the support of the Minnesota Legislature. And that’s far from certain.

Duluth already boasts the highest sales tax of any city in the state, collecting it at a total rate of 8.375 percent.

Larson promoted the sales tax as preferable street-funding mechanism to property taxes. In order to raise a comparable sum, Duluth would need to raise its levy by about 40 percent.

Larson also noted that the sales tax spreads the burden beyond local taxpayers to tourists and other people from outside the city who transact business in Duluth, using local streets in the process.

Holly Jorde cast a vote in favor of the proposed sales tax at First United Methodist Church Tuesday, aka the “coppertop” church.

“Without it, we would end up just paying for it other ways,” she said. “I’m willing to pay for services because we all use them, and I think it’s wise that it’s also channeling the resources of tourists, because that’s such a huge industry in Duluth.”

Reflecting on the vote, Larson said: “I’m not surprised the community has chosen this path forward, and I do think it is the best one.”

“But a win margin like that is wonderful, and it’s critical. It’s really important, because now I have to go down to the Legislature and ask for their permission. They would have to ratify this, and I think it’s hard to say ‘no’ to a community that has spoken so overwhelmingly,” Larson said. “This isn’t a divided vote.”

Larson said she’s ready to get to work.

“I have very, very clear marching orders now that this is the path forward, and we’ve got to get it done.”

Jimmy Lovrien of the Eastern Observer contributed to this report.