News Flash

Wright County News

Posted on: February 5, 2020

Local Option Sales Tax Funding Several Needed County Highway Projects

At a time when state funding for road projects fluctuates and the need to improve and repair an aging infrastructure system is becoming more of an issue, for more than a decade Minnesota counties and larger cities have looked for ways to increase revenue to fund their own projects.

One avenue explored has been to enact a Local Option Sales Tax (LOST) that can only be used for county highway/road projects. More than half of Minnesota’s 87 counties have a half-cent LOST to generate revenue for transportation projects, more than half have a wheelage tax (a license plate tab fee between $10 and $20) and 30 counties have both.

Until 2017, Wright County had neither. In June 2017, the Wright County Board of Commissioners approved the half-cent sales tax option based on projections it would be bring in approximately $5 million a year. The hope was to raise upwards of $25 million to fund local road projects over five years. Wright County Highway Engineer Virgil Hawkins said that those pre-estimates were low.

“The revenue generated by this has been about $7.3 million a year, which is more than we expected,” Hawkins said. “We were expecting about $5.5 million, so that has been good news. So far, the entire amount we expect to collect by the time this expires Dec. 31, 2022, is about $36 million over that time frame. Right now, we’ve got eight different projects that have either been completed or are in the process of being completed.”

Of the eight projects funded, the County State Aid Highway (CSAH) 9 project in Waverly and the CSAH 18 project between Albertville and St. Michael have been completed, as has the county’s share of the Minnesota Department of Transportation’s I-94 project in Albertville. A four-lane expansion of CSAH 39 in Otsego is currently out for bids. A CSAH 30 project in Delano will be bid out this spring. A County Road 118 project in Monticello will be bid out in 2021. A project on CSAH 37 between Albertville and Otsego will be bid out in 2022 and the right-of-way acquisition for the CSAH 19 one-way pair in St. Michael is ongoing.

Commissioner Charlie Borrell was a vocal opponent of the LOST plan when it was presented in 2017, but he has come to see the value that can be generated, especially by those who don’t live in Wright County, but spend money when they come – estimated to be 30 percent of the total revenue raised.

Unlike big-ticket bills like property tax payments, Borrell said the small amount that comes out for purchases can add up and has made him come off his 2017 opposition.

“I voted against this before when it came to the county board, but I’m kind of softening up on that,” Borrell said. “If I go out for dinner, I don’t notice that I spent 26 cents for our roads, but I do notice every time I write out a check to pay property taxes.”

When the LOST was enacted in 2017, the need for it was demonstrated by more than $78 million in projects that needed to get done on the county road system without an adequate funding source to accomplish it. After factoring in the highway department’s Long-Term Transportation Plan, that number jumped to almost $188 million (in 2019 dollars).

Hawkins said the projects in the draft plan for prioritizing projects could use money from LOST. The Long-Term Transportation Plan, which was adopted in September 2019, extends out to 2040 and includes 20 road construction projects at a cost of about $175 million, approximately $12.5 million in intersection improvement projects and roughly $8.6 million in trail projects done in conjunction with road construction. While the commissioners debated the merits of some of the trail projects, Hawkins said the road projects identified as priority projects will need to get done at some point.

“We adopted our long-term transportation plan last fall,” Hawkins said. “This list reflects projects that were recommended. These are necessities, not niceties. The total for highways is up to about $190 million over 25 years.”

As things currently stand, LOST funding is slated to sunset Dec. 31, 2022. However, Hawkins will advocate to have the sales tax authorization extended out for a couple of a reasons – it will be needed in the future and the funding has helped the highway department make some necessary road improvements that depended on the sales tax revenue.

“The program has been a success and these projects would not have been constructed without this funding,” Hawkins said. “These projects were needed. We’re a growing county with demands on our highway system and this funding helps get needed projects done.”

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