We can't tax ourselves into better times

The Carlton and Wrenshall school districts made a joint effort to obtain funding from the State of Minnesota but it didn’t make the cut in this year’s bonding bill. This funding — called enhanced debt equalization aid — would have covered approximately 46 percent of the proposed consolidation improvements between the two districts. Depending upon what consolidation scenario was sought, the total cost was estimated at around $38 million, so about half of that would have been paid by our local Carlton and Wrenshall school district taxpayers and the rest would come from all of the taxpayers of the state.

This was to be a very good value for the residents of these two districts. Remember, we are all going to pay for educating the kids no matter what happens. The question is how much are we going to pay and what kind of value do we get for that important investment?

I can assure you, the taxpayers of Carlton School District 93 will be paying substantial increases in property taxes very soon.

Here’s why: Carlton has a high school that is very old and has substantial facility needs. If the newly elected school board decides to take $10 million or more from you in what is referred to as “health and safety money” without any voter approval required, you will be required to pay.

It has already taken $5.5 million in this manner. The school board also has the option to close the high school and farm out grades 9-12 to another district or districts in what is called a “tuition agreement.” This will require a new referendum, and millions in Carlton district property taxpayer-funded bonds to expand the existing South Terrace elementary to create space for grades 7-8. Thus far, dissolution has been forbidden to be discussed by a 4-2 majority of the board.

We have seven public school districts in a county with 36,000 residents. I challenge any reader to find a county with more school districts per capita in the United States. Most of the districts adjoining the Carlton district have extra capacity to take on Carlton’s kids in the event of a dissolution. This process can be planned and orderly, but you then have to actually talk about it and have a plan.

What is the rest of the tax picture? The county is still working through judgements on the utility company lawsuits. The state sets the tax rates for the utility corridors that cross our county. Courts are finding that these utility companies were overtaxed by the state-mandated property tax rates. Through no fault of our own, our county (and schools and townships) is responsible for paying back the overtaxation on utility corridors within the county.

Then, we have Covid-19, and various budgets have been strained by that, as well as impacts to businesses who are behind on their tax payments.

The county is being mandated by the state to improve the jail by 2023. To pay for the jail, county commissioners will likely increase property taxes even more, or seek a local sales tax increase to help service the required bond debt for the jail. The logic with a sales tax increase is that our community has a lot of retail sales from outsiders passing through the area. This is true, but local residents who shop locally will pay also, and our retailers must compete against lower tax jurisdictions and internet sales.

The county has constructed a number of new taxpayer-funded public facilities, including a new transportation building, new human services building, new public works building, and purchased and renovated the old Cloquet City Hall for more offices. Almost simultaneously, the Fond du Lac Band is purchasing land and removing it from the property tax rolls. Understand, it is the tribe’s right by treaty to do this. Before European contact, the tribe didn’t have property taxes, or any taxes for that matter.

Our county has one of the highest property tax rates statewide as a percentage of average income. We live in a state with the fifth-highest taxes in the nation. I see what is happening in California, New York, New Jersey and Illinois to their working population, as residents leave these states and take their expertise and work ethic with them.

“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle,” Winston S. Churchill once said.

I think our Carlton school district, and our entire county, needs to consider what happens to the residents when we attempt to tax ourselves to prosperity. Adding a global pandemic doesn’t help. This isn’t just a matter of a resident calling and complaining about their home property tax statement. It goes further. It affects private growth, redevelopment and reinvestment into the community, which grows our tax base.

You will almost never hear about the deal that never happened. It just quietly slips away and goes somewhere else, or it just never happens. Meanwhile, the paint continues to peel and blister, and the lawn grows taller.

I believe we may have done some long-term financial damage to ourselves by the decisions we have made locally, and this is exacerbated by the context of the state we currently live in. There are still tough decisions to be made. It is shaping what type of community we will be long-term.

I wish our community leaders godspeed.

Writer Dave Chmielewski is a local developer and entrepreneur. He and his wife, Jennifer, live in Blackhoof Township with their two children. Jennifer is a member of the Carlton school board.