Sales Tax Distribution Lies

In the end I did vote to distribute funds to surrounding communities even though I fear some of that money could be wasted.  There were communities that absolutely did the right thing like Mantorville.  Great job, Mantoville!

I voted yes because I support surrounding communities and it would be wrong to punish all for the foolish decisions of a few.  I know it’s not too late for communities to use these dollars responsibly and I hope they all will.  Ultimately if dollars are used to create special places throughout the region it is wise, if it is given away to special interests it’s a joke.

I do want to be clear that a number of statements were made that are false or misleading.

Here are some things that were promised or said that were untrue.  The one that bothers me the most was a promise made by the Common Cents committee that promoted the passage of the sales tax.

Here is what the actual Common Cents website said:

This was part of the Legislature’s final agreement and a requirement before giving Rochester residents the opportunity to vote on this initiative.  It is estimated that 40-50% of all revenue raised comes from visitors and workers that come to our community, including those from surrounding communities.  Thus they will share in $5 million, to be divided up among 17 area communities and used for economic development.  For those projects, the city will determine the approval process and schedule and will be working in consultation with those communities.  The broader SE Minnesota will benefit from this.

I added the underscore for emphasis.

Despite writing this and selling this, the very same people behind Common Cents lobbied the City Council to NOT work in consultation with those communities.  When I wanted to work in consultation with these communities, I was accused of micromanaging.  To be clear, I wanted to keep this promise.

As a result a city like Stewartville can use these dollars to subsidize suburban sprawl residential housing.  Any serious economic development professional can tell you this will have absolutely NO incremental economic development value.  The reason that it has no value is that the small subsidies offered will not create more housing; rather it will change location and profit margin, but not the actual number of regional units.

We voted for this.  The voters spoke when they voted in November.

Again this is false, the ballot question called out $10 million for economic development.  There was no mention on the ballot of the distribution of funds.  When this was explained to some folks on Monday, they looked like a deer in headlights.   The $5 million was hidden from sight.  The $5 million was put in at the same time that money to expand the Boys & Girls club and the library was taken out.  The fact that this question passed had absolutely NOTHING to do with distributing $5 million.  It passed despite this, not because of it.

Rochester supported this.

Actually the Rochester City Council never supported the inclusion of $5 million.  We submitted a package to the Legislature based on the feedback of our community.  Other cities like Duluth don’t even have to get voter approval or project approval from the state.  Greg Davids then took it upon himself to rewrite this is such a way to punish Rochester and reward his district.  The Rochester City Council was never consulted on the Greg Davids changes nor did we ever take an official action to endorse it.  My personal feeling was that expanding the busiest library in the state of Minnesota was a better project than Davids’ pork.

This policy is fair.

What is good for the goose is good for the gander.  At the same time Greg Davids decided it would be fair to have Rochester distribute sales tax funds because visitors pay a portion of it; he decided it should not apply to Lanesboro in his district.  This is despite the fact that Lanesboro is even more dependent on visitors.  I don’t think that Lanesboro should share sales tax, but I do think that Greg Davids is a hypocrite…

In reality there are dozens of cities that have local option sales taxes.  I think that Rochester should be treated the same as other cities.  Everybody or nobody should be subject to this standard.

40% of our sales tax dollars come from surrounding communities. 

There have been a number of different versions of this statement, but basically all attempts to show a large percentage of our sales tax comes from the 17 surrounding communities.

Greg Davids really told a whopper. He actually said:

First of all, most of the money going into the Rochester sales tax comes from residents outside the city of Rochester.

This is 100% false and I can only assume the source of his data was his backside…

Problem is that it is estimated that 40% comes from non Rochester sources.  The largest portion comes from 2.75 million visitors to the community and then from area residents not living in Rochester.  Further, of those non Rochester residents only a portion of those live in the 17 named cities.

It is really weird having the Chamber of Commerce Director mouthing “your wrong” to me at an official meeting.  But hey, at least I wasn’t the citizen speaking out against the distribution that got a talking to by him in the Rotunda…

Surrounding communities deserve this because they contribute sales tax dollars.

The fact is the taxpayers of Rochester pay far more to subsidize services and institutions that support and employ surrounding communities than we will ever recover from sales tax or other fees.  While some Rochester businesses that employ residents of surrounding communities pay property taxes in Rochester.  Many do not.  Many portions of the Mayo Clinic do not pay property taxes as they are non profit (though Mayo as a whole is our largest tax payer).  As a result Rochester tax payers are paying for the roads, bridges, public safety, and other services to support the jobs of these residents and get not revenue from the benefiting employees.  Think about this when an area resident goes to buy something at a Rochester store.  We get a sliver of sales tax from the purchase (actually the 1/3 of purchases that have sales tax applied).  But who is paying for the city roads they used, and the infrastructure and public safety that makes the business they visited possible?

Rochester has a long history of supporting surrounding areas.  We have paid $22 million to protect wellheads in area we annexed in order to protect everyone’s water supply.  We contribute to regional transportation projects that benefit these surrounding communities.  These projects include Highway 52, 63, and 14 improvements.  We also fund institutions that benefit the entire region like our Public Library, our extensive park & trail system, Civic Center, Art Center, Civic Theatre, Recreation Center, Senior Center, and on and on.

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