Tofte hears latest morphs on sales tax proposal

Nancye Belding
True correspondent

At its January 11 town meeting, Tofte supervisors and residents heard the latest proposals for continuing the one-percent sales tax scheduled to sunset in November and for adding new three-percent taxes: on food and lodging, and recreation. Treasurer Bill Hansen and Lutsen Resort owner Scott Harrison, both members of the Cook County Economic Analysis Council, presented some of their findings and sought feedback. The council is meeting with many county stakeholders, trying to generate consensus for a sales tax proposal that will go to the legislature in March. “We’re all in this together,” Hansen said. “We’re hoping the one-percent tax and the lodging and recreation taxes will be looked at as one package,” Harrison said. “Our competition isn’t each other; it’s Duluth, Vegas and Disney.
The council has assembled some facts and figures about where the county’s revenue comes from. “The primary driver of the Cook County economy is tourism,” Harrison said, accounting for about 70 percent of income in a direct reversal since 1920, when mining and manufacturing made up that same 70 percent. The support economy (schools, health care, government services) has remained fairly constant.
The biggest problem with our tourism-based economy is that it causes unemployment and underemployment during the winter season, especially in April and November, but requires more labor than is available during the summer peaks. Another problem has been that income from lodging has been basically flat-line since 1999 and occupancy rates have been only 42 percent compared with 65 percent nationwide. This makes it difficult for resort owners, especially with older properties, to re-invest in their buildings.
The council has decided that extending the one-percent tax, which could require a referendum even if the legislature approves it, should be limited to actual infrastructure improvements. Possibilities include a new pool in Grand Marais, library expansion, projects for the Joint Powers Recreation Board, and continued support for the hospital. “We have a compelling story for the needs of the hospital, recreation and community,” Hansen said.
The three-percent taxes would support any kind of economic ventures that increase activity during the eight months of slow season. While this could include cultural festivals and events it could also be aimed at attracting conventions for fire and rescue training or lumber products, and creating a county-wide public shuttle bus system in partnership with Arrowhead Economic Opportunity Agency.
County Commissioner Bruce Martinson said, “Some ventures will flop. But we should just go ahead, take the risk.” Hansen said the consensus-based process is a chance for stakeholders to learn to work together. “We have to be of one mind here. Legislators are forcing us to be cooperative. It’s a huge opportunity for this county.”
James and Huggins said their concern is that any initiatives benefit the West End proportionately.

Note: portions of this report were excerpted in the Cook County News Herald.