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Sales tax could fund downtown plan

Eric Killelea

The Williston City Commission is considering imposing a 1 percent tax on lodging and restaurants, which could generate $1.2 million per year.

In February, Mayor Ward Koeser asked commissioners to further their pursuit of addressing the lack of downtown parking. On Tuesday, Commissioner Howard Klug offered a solution — impose a lodging and restaurant tax to generate revenue.

“We have the ability to collect tax money,” Klug said, adding the city already collects a 2 percent lodging tax on its hotel rooms. The current hospitality tax was implemented in 1982, according to the state Tax Commission.

Karen Larson, deputy auditor, said the city has a 1 percent sales tax, as does the Park and Recreation District. The state imposes a 5 percent sales tax itself.

Klug said the extra tax can generate enough revenue to help solve the downtown parking issue and perhaps create new financial options, allowing the possibility of constructing a convention center.

The North Dakota Tax Department says a tax could be imposed on meals, drinks and hotel rooms and generate a substantial amount to pay for downtown parking options.

The tax could generate the following: Alcoholic beverages at $141,000, restaurant foods at $570,000 and hotel room rentals at $488,000 annually, according to the department.

Estimates are based on the most recent four quarters of actual taxable sales and purchases reported by businesses in Williston, according to an email Kathy Strombeck with the tax department sent the city auditor.

Strombeck tabulated three years of data to verify a rise in business activity.

“…And not surprisingly, all sectors have grown with the exception of alcohol which dipped a small amount in the last four available quarters compared to 2012,” Strombeck said. “The estimate does not factor in additional growth — the city can make assumptions about future growth in these areas. Statewide growth in total taxable sales and purchases is assumed to be approximately 10 percent per year.”

The commission expressed interest in the proposal and agreed it could benefit the city.

Commissioner Tate Cymbaluk said the board needs to take a hard look at establishing the tax.

“I think it’s a fantastic idea,” Cymbaluk said. “I think it’s a fair tax.”

Commissioner Chris Brosteun, who heard the proposal at a recent parking committee meeting, said citizens already order pints of beer valuing $8. If people were willing to enjoy neighborhood diners, restaurants and hotels, he saw nothing wrong with imposing a small tax to help city needs.

“The tax is minimum impact but a lot of benefit,” Brosteun said.

In February, the commission voted down a request from the city planning department to start a tax incentive fund district to fund a parking garage.

The board voted 3-2 against the funding mechanism, with Koeser and Commissioner Brad Bekkedahl having voted in approval of the proposed TIF district.

On Tuesday, Bekkedahl said the city had looked at a similar lodging and restaurant tax and agreed its implementation can help with city parking concerns; however, he did mention a scaled back TIF district would help as well.

Commissioners directed the city auditor to prepare documents on the proposed tax for a March board meeting.

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