The Cost
A Shared Responsibility for Public Safety
The financing plan was developed to ensure that the new regional public safety center meets the needs of our community and region while using taxpayer dollars wisely. The total cost of the proposed plan is estimated to be $29.6 million. The proposed plan would be paid for using:
State bonding money: In 2023, the Minnesota Legislature provided $10 million in bonding funds to help fund the project.
A local half-percent sales tax: The Minnesota Legislature authorized the City of Hibbing to allow Hibbing residents to consider a local half-percent sales tax to finance up to $19.6 million over 20 years or until the project is paid for, whichever happens first. Hibbing voters will make the final decision on Tuesday, November 5.
Grant funding: The city is actively pursuing additional funding sources, including grant money, to support the cost of this project. If secured, the grant funds would help reduce the overall cost of the project on taxpayers.
Funding Source Contributions
When factoring in state bonding funds and non-resident sales tax contributions, Hibbing residents will pay less than one-third of the project’s total costs.
Sharing the Cost Between
Residents and Non-Residents
A local sales tax spreads the cost of the project among residents and non-residents who purchase goods and services in Hibbing and are served by the city’s public safety departments. About half (50.1%) of the $19.6 million local sales tax collected for the public safety center will be paid by non-residents.
If the projects were funded through a property tax increase, the cost burden would fall solely on homeowners, renters and commercial property owners in Hibbing.
The average cost of the half-percent local sales tax for Hibbing residents would be approximately $31.06 annually or $2.59 monthly per person.
Sales Tax Contributions
Common Questions About Local Sales Taxes
-
If approved by Hibbing voters, the local half-percent sales tax will be applied the same way as the state sales tax. The half-percent sales tax amounts to half of one cent for every $1 spent. For example, an additional 5 cents would be added to a $10 purchase if the half-percent sales tax is approved.
-
The local sales tax is not permanent. If approved by voters, collections from the local sales tax will be used to make bond payments to finance the city’s investment for up to 20 years or when the bonds used to pay for the project have been paid for, whichever happens first.
-
The local option sales tax has the same exemptions for purchases as the state sales tax, including groceries, clothing, prescription and over-the-counter drugs, feminine hygiene products and baby products. For more information, view this list of taxable items and this list of most nontaxable items from the Minnesota Department of Revenue.