Duluth City Council favors continued sales tax to support athletic facilities
The city's request will now head to the Minnesota Legislature.
DULUTH — After much discussion, city councilors decided Monday to pursue a 30-year extension of the half-percent sales tax people pay on local hotel stays, as well as restaurant and bar tabs.
The tax had been put in place in 2014 to support the development of recreational amenities throughout Duluth’s St. Louis River corridor, with the goal of generating $18 million. As the city nears that mark, the sales tax is slated to expire.
But city officials have agreed to ask the Minnesota Legislature for authorization to push that sunset date out up to another 30 years or long enough to generate as much as $36 million, with the funds earmarked for “capital improvements to parks-based public athletic facilities in support of sports tourism and enhanced quality of life.”
Former Councilor Joel Sipress called on the council to proceed with caution. He suggested the proposed legislative request was really Duluth asking for a new tax for a new purpose, rather than a prospective extension of the existing sales tax.
Sipress recommended the council not rush its decision.
“Here’s what’s going to happen if this passes tonight," he said. "If this passes tonight, the city administration and its representatives will go to the Legislature and say: The city of Duluth and its elected council are asking you to authorize this tax for the purpose of financing $36 million in park space public athletic facilities."
Sipress said that if the Legislature agrees to grant that request, the council will be obligated to move forward with imposing the sales tax for the stated purpose.
“If you turn around and say: Thank you, but no thank you. We really don’t want the tax under those conditions, this city will lose all credibility with our state legislative delegation. So, my ask to you tonight is, if tonight you cannot say we support a tourism tax to fund $36 million in capital improvements in parks-based athletic facilities, please do not approve this tonight in this form,” he said.
While councilors expressed some frustration with the compressed timeline to act on the resolution, all said they could get behind the request.
“These are big decisions that we make, and sometimes it feels like we’re running when we should be walking,” said 3rd District Councilor Roz Randorf.
But Randorf supported the legislative sales tax ask.
“We have several facilities that without proper funding — and we know the parks levy didn’t pass — they will fall into such disrepair that we will be in a sorry state," she said.
When asked how the city arrived at the $36 million figure, Jim Filby Williams, director of parks, properties and libraries, said he worked with "our city attorney, our CAO (chief administrative officer), our mayor and, most importantly and consequentially, our director of finance, to project out future revenue from this tourism tax, with intentionally very conservative assumptions.”
Filby Williams said he believes the council would have discretion to shorten the length of the tax or decrease the magnitude of city borrowing against that revenue stream. But he said the city would likely remain bound to use the funds for the stated public purpose.
Council President Janet Kennedy said she prefers the idea of raising money for park improvements through a sales tax rather than increased local property taxes, because “it really impacts everybody, not just the people who live here, but the people who come here to work and play.”
Kennedy said park facilities and infrastructure are in need of better funding.
“At the core, I’m going to invest in my community, and that means western Duluth. That means eastern Duluth. That means the districts on Park Point, the districts in Duluth Heights. We know they’ve been asking for this,” she said.
The resolution in support of requesting the dedicated sales tax passed 8-0 Monday, with Terese Tomanek, councilor at large, absent.