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Tweaking sales tax has its opponents

By Staff | Mar 12, 2009

The Rugby City Council recently kicked around a few possibilities for financing the $4 to $5 million District 1-2009 street improvement project that would lessen the burden on property owners, who will be called upon to pay special assessment fees.

One of those options was to tweak the current one percent city sales tax. Right now the tax is set up for the Rugby Area Job Development Authority (JDA) to get essentially 75 cents of every $1 collected, and the remaining 25 cents goes to the city for infrastructure maintenance.

Some members of the council would like to see a 50-50 split in costs, enabling the city to collect more funds toward infrastructure projects.

That idea, however, won’t be well received by members of the JDA, as that source of funds covers the salary of its full-time director and fuels economic development endeavors.

Over the past five years sales tax revenues have averaged just above $244,000. Of that figure, $183,000 has funded the JDA, with $61,000 going into the city’s coffers.

While the additional dollars toward repairing and maintaining streets would be put to good use, would it actually do more harm than good?The city is already getting a piece of the sales tax pie for infrastructure needs, plus it is collecting an additional $3.75 a month on every residential and commercial water bill.

The JDA, on the other hand, has only the sales tax to fund its needs.

When the sales tax was established in 1993, city officials believed the 75-25 split in funds for the JDA and infrastructure needs was appropriate.

A change now would suggest economic development efforts can manage with fewer dollars, and the bigger emphasis right now should be repairing city infrastructure.

It would be wise for the council to meet with JDA officials and discuss how this potential change would affect that entity and economic development efforts for the area.

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