Ralph Doty: Don't forget: Sales tax enacted to hold down property taxes

Duluth's home and business owners are not paying enough property tax when compared with the levies of St. Louis County and the Duluth public schools. At least that's the implication of remarks made by Council President Roger Reinert last Monday w...

Duluth's home and business owners are not paying enough property tax when compared with the levies of St. Louis County and the Duluth public schools. At least that's the implication of remarks made by Council President Roger Reinert last Monday when the Duluth City Council was working on a preliminary budget for fiscal year 2007 and a tax increase to support it.

Just before votes on three resolutions, Reinert delivered a sermonette in which he tried to explain, "especially for our friends in the media who are going to cover this story," why a tentative 6 percent property tax increase is not a big deal.

Well, as a loyal member of the media, I feel obligated to tell you what he said. Here are his comments, word for word:

"For the folks listening at home (on public access cable channel 7), one of the things I think that always gets lost in this whole conversation is that about 20 years ago your property tax bill used to be about a third, a third, a third. About a third went to the school board, about a third went to the city and about a third went to the county.

"What's happened over the last 25 years is that the city consistently did not keep up with inflation. Consistently it played politics (emphasis added) and set zero percent increases, to the point where we are at today, where out of every dollar of property tax that you pay, only 22 cents goes to the city.


"Now, I think this is an amazing revelation to most people, because based on the contacts I get, most people think their entire tax bill goes to the city of Duluth, and they wonder where it gets spent. And when you try and share with them that actually about 66 cents out of every property tax dollar they pay goes to St. Louis County, you get this glossy-eyed reaction because, um, they don't interact with the county, I guess...."

In a discussion he said he had that morning, a county commissioner told Reinert they got "zero" number of people who showed up last year to talk at a meeting scheduled to get the public's reaction to the county's proposed tax increase of more than 8 percent. Ditto for the school district, he added.

The at-large councilor continued: "And yet, we talk about a 6 percent potential -- maximum 6 percent increase -- on 22 cents of your property tax bill and I think I've had, I don't know, 42 e-mails and phone calls on it."

For whatever reason -- perhaps because he hasn't lived in Duluth very long -- Reinert neglected to mention one source of revenue crucial to the city's solvency: the city sales tax. In 1969, the Minnesota Legislature gave Duluth the green light to ask city voters to approve a 1 percent city sales tax, to be added to the state sales tax. Voters were promised that the city sales tax would control the city's skyrocketing property tax and the referendum was approved.

Because past city lawmakers and mayors kept the promise of using sales tax revenue to control property taxes, the city's property tax has pretty much stabilized in recent years. The sales tax, accompanied by recent generous state aid increases for schools, means the city's percentage share of your property tax bill -- especially when compared to the county levy -- has gone down.

Consider this. In fiscal year 2007, Duluth's sales tax will bring in $11.4 million for the general fund. The city's share of your property tax bill will fetch $12.2 million. In other words, the sales tax is as important to the city's revenue stream as the property tax, something Reinert neglected to tell you -- especially those of you with "glossy" eyes. And so, one is led to ask of Reinert: What's wrong with a stabilized property tax in Duluth?

If Reinert believes the city's share of the property tax should be closer to the county and school levies, then here's an idea for him: He should introduce a resolution to repeal Duluth's sales tax and put all the city's financial eggs in one basket: the property tax. Then, the city's share of a homeowner's total property tax bill will increase and eventually equal the county and school levies -- something he apparently thinks is desirable.

Of course, if Reinert does that, this will be his last term on the city council.


Early Christmas

I'd like to be the first to wish you a merry Christmas. And why not? Some area merchants are trying, even at this early date, to get us into the holiday spirit. Early this week, I visited several stores in the Miller Hill area and discovered that Christmas merchandise is already being sold.

Good grief, Halloween is 37 days away and Thanksgiving is 10 weeks into the future, and already stores are beginning to present us with the holiday spirit, or whatever.

During my visits a few days ago, I learned that Hermantown's Wal-Mart, Duluth's T.J. Maxx and the Miller Hill Mall's Walgreens pharmacy are displaying and selling holiday merchandise, decorations, cards and some toys. Certainly, merchants are entitled to sell Christmas items whenever they want. But if this trend continues, Christmas stuff will be coming out right after Independence Day.

This dates me, but I can remember when commercial Christmas displays first appeared the day after Thanksgiving. Those days are gone forever, I know, but I sure miss them.

Ralph Doty can be reached at , or c/o The Duluth Budgeteer News, 222 W. Superior St., Suite 100, Duluth, MN 55811.

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