Hermantown residents will get to vote on their 1 percent sales tax on the Nov. 8 ballot - not whether to raise or lower it, but whether to allow the city to use it for a proposed regional wellness center.
"It's not a new tax, it's not a new rate of an existing tax, it's just the authority to use the money in an additional way," said City Administrator John Mulder. "It's just permission to use money that we have."
Today the 1 percent sales tax the city collects can only be used for a sewer line extension; improvements to the water system; and construction of a building with police, fire and administrative services.
If voters approve the use change, the money also could be diverted toward the $17 million regional wellness center at Ugstad and Arrowhead roads that Essentia Health and the YMCA will be a part of.
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The city proposes sharing $4.5 million of the costs of that facility with St. Louis County; the hope is that the state will chip in $8 million in a bonding bill, if one should actually pass next year or beyond.
"We've got a lot of community support for this project," Mulder said. "I've heard nothing but positive comments so far."
A "yes" vote on the sales tax measure is only one step toward opening that money to a fourth use. The Legislature also needs to approve the change, which it did in this year's tax bill that died without a signature on Gov. Mark Dayton's desk.
Mulder was confident the necessary approval is on the way once the government fixes the charitable gaming provision that led to the bill's demise.
"The Legislature and the governor are going to get that piece fixed," he said. "Typically, in sales tax changes, the legislators like to see the voter referendum happen before the law is passed (anyway)."
If the $8 million from the state comes through, the rest of the wellness center will be built with $2 million from Essentia, $2.5 million in fundraising and $4.5 million from the city and county. The 72,000-square-foot facility, in the making for years, would host a full-service YMCA and Essentia wellness services.
Hermantown set a new monthly record in sales tax receipts in August, thanks to the opening of Fleet Farm. The city has seen 15 percent increases in sales tax revenue in the past two years, and it will likely continue to rise even as the tax remains at the 1 percent rate voters approved in 2012.
But expanding the sales tax use, Mulder stressed, still could be a hurdle.
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"The worry I have is if you see a question about taxes on a ballot, you're more likely to vote no."
