Friday, February 23, 2007

New Sales Tax Proposal

Commissioner _______________________________ introduced the following Resolution and moved its adoption:
RESOLUTION NO. ____
RESOLUTION RECOMMENDING SPECIAL LEGISLATION REGARDING RE-AUTHORIZATION OF COOK COUNTY’S 1% GENERAL SALES TAX AND AUTHORIZATION OF TOURISM-FOCUSED SALES TAXES
BE IT RESOLVED, by the Board of Commissioners of Cook County as follows:
SECTION 1. RECITALS.
COMMUNITY INFRASTRUCTURE
1.01. The current 1% general sales tax that is paying for capital improvements at Cook County’s North Shore Hospital and Care Center is expected to expire with the full funding of the intended improvements in place by late 2007.
1.02. Cook County has unique needs for additional community capital improvements and community development due to its extremely remote location on the northern border of Minnesota with no nearby infrastructure in an adjacent county for its residents to utilize.
1.03. Cook County’s large geographical area being the size of Rhode Island creates large burdens on the County government that is overly burdensome for its population of approximately 5,000 residents (and non-resident second homeowners) to shoulder.
1.04. The Board recognizes that a re-authorization of the 1% sales tax could be utilized to fund necessary community capital improvements and community development for the benefit of all Cook County residents.
SAFEGUARDING FINANCIAL VIABILITY OF COMMUNITY HOSPITAL
1.05. Due to an abnormality in the initial legislation authorizing the Cook County North Shore Hospital and Care Center (the "Hospital"), the Hospital is the only community hospital in the State with a cap (the "Levy Limit") on its ability to levy additional funds.
1.06. The Cook County Hospital District (the "District") has represented to the Board that, due to the nursing home reimbursement rates, nursing home revenues do not meet operating expenses, and as the tax levy is the available source of funds to cover such shortfall, the Levy Limit creates and will continue to create a problem for the District.
1.07. Recognizing that the Hospital may need to levy additional funds in order to offset present and projected nursing home operating deficits, and in order to help secure the economic viability of Hospital (and the availability of appropriate medical services) for the benefit of Cook County residents and visitors, the Board adopted a resolution on February 13, 2007 recommending that the enabling legislation that created the District be amended to authorize the District to levy taxes consistent with the requirements of the Hospital District Act but without the Levy Limit.
STABILIZING ECONOMY AND ECONOMIC WELL-BEING OF RESIDENTS
1.08. As evidenced in a study produced by the Cook County Economic Analysis Council (the "Council") and discussed throughout 2006 in a series of public meetings and other public forums:
Cook County’s economy is over 80% based upon tourism, and is the most tourism-dependent, by far, of any Minnesota county.
Most of the County’s tourism sales are generated by overnight lodging visitors, and lodging sales have remained stagnant (in constant dollars) since 1998.
Total monthly lodging sales from mid-October through mid-June are approximately 16% to 44% of peak summer levels, and total Cook County sales suffer the same seasonal imbalance, resulting in seasonal unemployment exceeding the State average and too few full time jobs with benefits.
From November through May, the County’s tourism economy depends primarily on visitation for winter recreational activities involving snow (such as skiing or snowmobiling), resulting in low economic activity prior to such snow-dependent recreational activities beginning and after such activities have ended, and making the entire economy uniquely vulnerable to poor-snow years.
With a majority of the County’s workforce employed in tourism and much of the rest of the workforce indirectly dependent on tourism sales, the wages, benefits and economic well-being of Cook County workers and residents are suffering due to the large fall-off in economic activity from mid-October through June.
1.09. Cook County does not have an event/visitors bureau that has enabled other communities in Minnesota (such as Duluth), as well as communities in other states that, like Cook County, depend heavily on tourism, to draw tourists based on a consistent, community-wide implementation of events, festivals and other cultural attractions.
1.10. About one-half of the 3% lodging taxes collected by the three tourism districts (Gunflint Trail Association, Grand Marais Area Tourism Association and Lutsen, Tofte Tourism Association) have been utilized for many years to pay for a County-owned golf course and have not been available for promotion.
1.11. The County’s three tourism associations have passed resolutions representing that:
the entire 3% lodging tax funds are needed to adequately promote tourism for the benefit of the County’s economy, and there is an immediate need to restore the portion of these lodging tax funds currently being utilized to pay for the County-owned golf course.
Neither the tourism businesses nor tourism associations have the resources to fund the events, festivals and cultural activities that are necessary to improve the County’s economy for the benefit of its workers and residents.
1.12. Other Minnesota communities (as well as communities in other states with tourism-dominated economies) collect higher lodging taxes (e.g. 5% to 7% for Duluth, St. Cloud, St. Paul and Bloomington), as well as taxes on other tourism/leisure-related sales such as restaurant/bar sales and recreation/entertainment sales (taxes up to 3% of such sales in Minnesota and higher in other states).
1.13. The County’s three tourism associations have passed resolutions of support for a new Cook County events/visitors bureau to be funded with a combination of an additional lodging tax and new tourism-targeted taxes on restaurant/bar sales and recreation/entertainment sales.
SECTION 2. RECOMMENDATIONS OF THE BOARD.
2.01. Re-Authorization of 1% General Sales Tax. The Board hereby recommends that the 1% sales tax currently being used to fund hospital infrastructure be re-authorized to fund future capital investments in community infrastructure and economic development, with (i) approximately $200,000/year being utilized for approximately four years to pay for the outstanding balance (or make the remaining payments) on the bonds for the County-owned Superior National golf course and (ii) the balance (estimated at approximately $900,000/year initially) being utilized for capital investments approved by the County Board in community infrastructure (such as a new pool, other recreational facilities or a County-wide shuttle bus system) or economic development.
2.02. 1/2/3/% Tourism Taxes for Event and Visitors Bureau. The Board hereby recommends authorization of three tourism-focused sales taxes: (i) a 1% lodging sales tax (comprised of ½% from the existing 3% lodging taxes and a new ½% additional lodging tax , (ii) a new 2% tax on bar/restaurant sales and (iii) a new 3% tax on recreation/entertainment sales (i.e., admissions to ski, golf and other recreation or entertainment facilities and rental of recreation equipment such as skis, canoes and kayaks), to fund a new Cook County Event and Visitors Bureau (CCEVB) that will primarily organize, operate and promote events and festivals during slower tourism periods of the year (currently mainly mid-October through June) to increase tourism visits during such periods for the benefit of economy and residents of Cook County. The Board hereby further recommends that such additional sales taxes (i.e. the new ½% lodging tax), the new 2% bar/restaurant tax and the new 3% recreation/entertainment tax) continue for an initial period of five (5) years and thereafter for successive five (5) year periods in the absence of a vote prior to the end of the fourth (4th) year by any of the three partner tourism associations to not support the continuation of such additional tourism taxes, in which case the taxes shall at the end of such fifth (5th) year and the ½% existing lodging taxes shall be restored for promotional uses by the respective partner tourism associations. Consistent with the resolutions adopted by the three tourism associations, the Board further recommends (i) that the CCEVB be governed by a Board of Directors consisting of thirteen (13) members, four (4) elected by the Grand Marais Area Tourism Association (GMATA), 2 elected by the Gunflint Trail Association (GTA) and seven (7) elected by the Lutsen Tofte Tourism Association (LTTA), such board representation representing the projected tax collections from each such tourism district, and one advisory member (nonvoting) elected by Grand Portage, and (ii) that all budgetary decisions or changes in the structure of the CCEVB require approval by a supermajority vote of at least nine (9) members of the CCEVB Board of Directors.
2.03. Transmission to Legislature. The Board hereby authorizes the Chair and the Clerk of the Board to transmit a copy of this Resolution to Cook County’s state legislators as well as to the House and Senate committees with jurisdictions or purview over sales taxes, tourism, or community or economic development.

Adopted: February ___, 2007


________________________________________
Chair

ATTEST:


_____________________________________
Clerk

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