Wadena voters are asked to vote 'yes' or 'no' on sales tax question. Here's what you should know.

WADENA — The Wadena City Council wants to add a .25% sales and use tax on all taxable purchases in the city of Wadena in an effort to more broadly spread the cost of paying off the remodeling costs of the new Wadena Library.
The approval would depend on your votes in the 2022 election. A simple majority vote in favor will pass the referendum.

This question will be on your ballot for the 2022 election:

“Shall the city of Wadena, Minn., be authorized to impose by ordinance a local sales and use tax of one-quarter of one percent (.25%) to finance the Wadena Library Rehabilitation Project? An affirmative vote would impose the tax until a total is raised of $3 million (plus associated bonding costs including securing and paying debt on bonds issued to finance the project) or for 20 years, whichever comes first.”

Seeing a question that asks you to pay more taxes is not an easy sell in an already heavily taxed county. It's an idea that brought opposition early on from several business owners, who liked that Wadena had a lower or equal sales tax amount compared to other area communities.
But local leaders believe that approval of this tax will be better for Wadena residents’ pocket books in the long run when compared to an increase to the city’s levy. It would spread the cost out to all those buying taxable goods in the city, wherever they are from.
"Would it lower your taxes? Probably. Would you pay a little more on your sales tax? Probably." Mayor George Deiss said during an Insight interview on KWAD.
There's no turning back at this point as the city has taken on bonds and the work is nearly complete. Aside from more fundraising, it appears the city's options are levy the amount or impose the sales tax to raise funds to pay off the bond.
According to data shared by Wadena Economic Development Director Dean Uselman back in 2020, Wadena residents only make up about 10% of the total sales that take place here. The idea to spread out the cost came because the library itself is used by the region, not just the city of Wadena.
Generally, local governments must obtain approval from the Minnesota Legislature before starting any local sales and use taxes. The city of Wadena gained that approval in 2020, before the project started. The city first approved moving forward with the tax plan in January of 2020 during a public meeting, with the hope that they could have the referendum question on the November 2020 ballot. That did not happen.
The city must conduct a referendum during a general election within two years of receiving legislative authority for the local sales tax. That means they have to make it happen in the 2022 election, or they have to start over again with this long process, or come up with a new plan. Either way, someone has to foot the bills and it appears there are no more deep pockets emptying out for the project.

When looking at the amount of tax that a quarter percent can raise, there are some important things to consider. In 2020, there were $157 million in taxable sales in Wadena County. Based on 2020 data, the one quarter percent sales tax would raise about $215,000 annually. The city's annual bond payment is $140,000, so it should make more than enough to cover the payment.
The money coming in for this tax would go into its own account and the public can request a look at that amount in the account at anytime, according to a response from the city of Wadena. If the amount coming in is higher than the payment needed, the city can use the extra to pay off the debt early, essentially saving interest.

• The Friends of the Wadena Library have worked to raise about $1.6 million.
• The bond amount to the city is $2,240,000.
• The sales tax would be imposed until either $3 million is raised, it's been 20 years, or when the city determines that enough has been raised to pay off the bond.

So, in theory, if the full $3 million is raised, that amount, plus the fundraising, plus the sale of the old library should be more than enough to cover the cost of the library remodel. It should even allow the city to complete Phase 2 of the remodel, which includes remodeling portions of the basement to maximize use of the facility. But that part of the project has not been approved at this time.
Here are some common questions being posed to the city about this ballot item and a few more that hopefully better clarify this idea.

Will this be a permanent tax?
No. Once the set amount has been reached ($3 million, plus bonding costs) or a period of 20 years has passed, the tax sunsets and the quarter percent tax is no longer imposed.

What does a quarter percent look like?
You can look at it like an additional penny on every $4 or $1 on every $400.

Why is this being considered?
The city has bonds to pay off that they are using to pay for the library remodel. The work has already been done – almost all the work. So the project is almost all paid for with bonds. This tax would go to pay off those bonds rather than levying more property taxes to pay for it.

Does this tax go on all sales?
No. This tax is only imposed on taxable sales. The Department of Revenue lists non-taxable items . Taxable items are already taxed 6.875% by the state, and another .5% comes from the Wadena County Transit sales and use tax. So with this additional .25%, the total sales tax in the city of Wadena would be 7.625%.

By comparison, Staples is currently at 7.375% and is seeking a .5% sales and use tax on their ballot. Perham is already at 7.875%. Other area communities are sitting at 7.375%, with no additional local option sales tax.