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Council could give final reading on sales tax hike

By Staff | May 1, 2009

The Rugby City Council could have a second and final reading on increasing the city sales tax from one to two percent this week during its meeting Monday evening, May 4.

It’s estimated a two percent collection would generate between $480,000 and $520,000 for the city annually. The majority of funds would be set aside for city infrastructure repairs and needs, while the remaining amount would continue to fund the Rugby Area Job Development Authority and economic development projects.

A first reading was approved by a 6-3 vote at a special meeting on April 9 following a lengthy debate.

The additional sales tax collection would help fund this year’s city-wide street improvements, thus lessening the burden on property owners through special assessments.

Proponents see increasing the tax as an opportunity to share the costs of street repairs between residents and non-residents and collect adequate monies for maintenance work on streets and other infrastructure in future years.

Opponents, namely business owners, believe the added tax will affect sales and be a deterrent to out-of-town residents shopping in Rugby.

If the council approves amending the sales tax ordinance to increase the total from one to two percent, opponents would have time to collect referendum petitions.

Petitions would need to be signed by qualified voters of the city equal in number to at least 20 percent of the total vote cast in the city at the most recent presidential election, which occurred last November. According to the state century code, “Each petition shall contain or have attached thereto throughout their circulation the full text of the ordinance or resolution proposed or referred. In addition, each petition shall list the names of the three electors who shall constitute the ‘Committee for the Petitioners’ who shall represent the act for the petitioners.”

The petitions would need to be filed with the city auditor within 30 days after the second reading. The auditor would have 20 days to review and verify the sufficiency of the petitions. If the petitions are deemed to be insufficient, the new amendment to the ordinance increasing the sales tax would be approved. If there is an adequate number of petitions, the council could repeal or change the ordinance. If it does, then a special vote would be called.

The May 4 council meeting begins at 7:30 p.m. in the council chambers at City Hall.

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