WINONA — A quarter of a cent.
That, said Winona County Administrator Ken Fritz, is what a sale tax increase would look like to fund a new jail for the county should the county seek and receive approval to use a dedicated sales tax to fund a proposed $22 million project.
On Feb. 9, the county board directed staff to look into funding the $22 million jail with a sales tax as opposed to a property tax increase. However, even if the county chooses to go the sale tax route, it's a process that comes with no guarantees and would take a couple of years to implement. That means funding for the new jail would not be approved until long past the sunset date order for the current jail by the Minnesota Department of Corrections.
That, said Winona County Commissioner Marie Kovecsi, is part of the problem in choosing between the two funding options.
"The timeline for the sale tax option is a negative because it doesn’t fit our timeline," Kovecsi said.
On Sept. 7, 2018, the Minnesota Department of Corrections gave Winona County just more than three years – to Sept. 30, 2021 – to have a new jail either built or a plan substantially in place to replace its current jail, which has been downgraded to a 90-day facility but will be decertified by the state at the end of September.
As of the state's most recent inspection of the jail, completed from June 23-28, Detention Facility Inspector Jen Pfeifer wrote, "Since (Sept. 8, 2018) the County Board has voted to retain an architectural firm for a new jail project but have made no other significant decisions/progress in the past 21 months. It is the recommendation of the inspector that there be no extensions granted to the officials of Winona County and that as of Sept. 30, 2021, the Winona County Jail in its current state will no longer have the authority to operate."
Meanwhile, the deadline for requesting approval from the Minnesota Legislature for a dedicated sales tax in 2021 passed on Jan. 31. And asking for a local sales tax is no guarantee of getting legislative approval, meaning that even if Winona County asked in time for the 2022 legislative session, there is no guarantee the tax would get the OK from lawmakers by the end of the session, which usually happens in May.
Cost, More Costs, Annual Cost
While the new jail -- an 80-bed facility that would meet current Department of Corrections standards in order to hold a variety of inmate populations -- is estimated to cost $22 million, that's not the only cost to the county.
Winona County Commissioner Marcia Ward said the price tag doesn't include the cost of renovating the old jail for a new purpose such as a juvenile facility or a space for diversion programs in lieu of incarceration. Plus, over the next 20 years, there's the cost of operating a jail, which will run somewhere between $40 million and $50 million over that time.
And while Kovecsi said that cost should not be figured into the jail cost, Ward disagrees, saying the estimates of how many inmates will need to be held are inflated by how the jail was run before COVID-19 and how it has been operated since.
"Part of this whole dilemma is they are using numbers from a few years ago," Ward said. "The numbers have gone down from COVID, I’d say about half."
A Settled Argument?
Ward, along with Commissioner Steve Jacob, have advocated taking another look at reserving 15 or 20 beds at the Houston County Jail and transporting inmates to that facility. The beds cost $300,000 a year, and if you add the cost of transportation officers, the cost is still far lower than $1 million annually.
That, she said, compares to the $1.2 million annually to pay for the jail and the $2 million-plus for operating it.
Kovecsi said that's an argument that's long been settled. The cost of renting jail space and constantly transporting inmates is one thing, but there's a second concern that money doesn't cover.
"That doesn’t count the safety cost of putting them on the road," Kovecsi said. "Also, local police departments would need to take someone off the shift to take them to a jail. That would leave that area unprotected."
Uncertain Funding Source
For 2021, 20 different cities or counties asked the Legislature for a dedicated sales tax for a capital project. Only a few, thus far, have legislation attached to the project.
Fritz said due to the timing, the county would need to make a request in January 2022 then put a sales tax referendum on a ballot by November 2022.
"If the referendum is approved, we would expect the tax to kick in the second quarter of 2023," he wrote in an email to Ehlers Financial Advisors. Furthermore, he added, "The Legislature may not approve another local option sales tax for Winona County, the referendum if allowed might fail, and if we add a sales tax for the jail, we will need to reduce the property tax to coincide with any new sales tax revenue."
While the new jail would cost about $1.2 million a year, Fritz said the new debt would be smaller. Since the county would no longer rent jail space in Houston County, that's a savings of $300,000. The county also has $275,000 of debt service coming off the books, so on $22 million, the new debt would be only about $750,000 annually.
That amount would easily be covered by a quarter-cent sales tax.
Christie Ransom, president and CEO of the Winona Chamber of Commerce, said that while the chamber has not endorsed either option – a dedicated sales tax or a property tax increase – to pay for the jail, she believes property owners would have an easier time swallowing a quarter-cent sales tax increase compared to an estimated 11 percent property tax increase.
Ransom said the chamber appreciates the property taxes in Winona County compared to counties across the river, a comparison that favors Winona County when it comes to attracting business. An 11 percent increase would take a bite out of the county's favorability.
"Most people don’t bat an eye at a half-cent sales tax," said said. "They get wary of an 11 percent property tax increase."