Clay County Commission

Dan Haglund

When Clay County citizens approved a half-cent sales and use tax in 2016, the initial budget projection for an annual collection was $1.6 million, and eventually grading up to $2.2 million over 20 years.
Well, the collections for 2024 came in at more than $4.5 million.
That’s a tax collection trajectory that would make any county board salivate.
Clay County Administrator Stephen Larson presented this finding in a budget update for the Clay Board of Commissioners on Tuesday in Moorhead.
Larson presented the progress of the half-cent sales and use tax, which was passed through bonds in 2016 and was implemented on Oct. 1, 2017, to cover the cost of the Clay County Correctional Facility and Law Enforcement Center in north Moorhead. The Department of Revenue administers the tax.
Larson said the collections dipped in November and December, resulting in a 2.19 percent decrease during the year, and an overall collection of $4.56 million.
Larson said he anticipates this year’s number to be $3.946 million.
“As you can see,” Larson said, “the half-cent sales tax does cover that amount.”
Larson added that payments have been coming in for this year on time as well, and had just received the April payment of $318,991. He said it was one of the highest monthly payments in the past seven-and-a-half years.
Since the original budget forecast in 2017 was set at $1.6 million and graded up to $2.2 million, and seeing the current half-cent sales tax collections nearly doubling those initial predictions, Commissioner Kevin Campbell, Dist. 4, inquired about seeing what future years may bring in.
“I know there are limits for what excess dollars can be used for,” Campbell said. “But as we look long-term for capital improvement needs, I think it would be good to see a forecast.”
Campbell alluded to potentially truncate the half-cent sales tax early or even use those tax dollars for something else in the future, since the collections have outpaced the budgeted predictions so strongly.
Campbell said, barring an unforeseen economic crisis, he could not see the collections ever dropping from $4.5 million to $1.6 million.
“It’s excellent to our benefit,” Campbell said. “But at what point in time to do we start saying OK, even with what our future needs are, can we sunset this early?”
Commissioner Ezra Baer, Dist. 2, asked Larson what is done with the monies collected above and beyond the projections, and Larson explained that amount sits in a restricted interest-earning file. Larson said it can be used to cover future tax shortfalls, but only for this particular earmarked purpose.
Clay County Auditor Lori Johnson, who was attending the meeting remotely, added that there is presently $3.6 million in the debt services account for this project.
The Minnesota state sales tax rate is 6.88 percent, but 7.38 percent for Clay County residents with this half-cent bump.