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September 6, 2008

Tax money would go to Alltell Center

City Council to vote on half-percent sales

By Dan Linehan

MANKATO — A proposal to enact a half-percent sales tax on restaurant food and drinks and ticketed events in Mankato goes to a public hearing and a City Council vote Monday.

The “hospitality tax,” which would net an estimated $400,000 per year, would cover operational expenses for the city-owned Alltel Center.

In the past, those expenses have been paid by the existing sales tax.

But the Legislature told the city this year it would have to stop using the sales tax to pay for operations.

City Manager Pat Hentges said the Alltel Center runs an operations deficit of about $250,000 to $350,000 a year.

If the new tax collects more than that deficit, the remainder will be put in a depreciation fund to pay for improvements many years in the future.

And even if council members are loathe to institute a new tax, Hentges said the alternative is to add that cost to property taxes.

With a hospitality tax, the burden would fall across residents from around the region, not just Mankatoans, he said.

The new tax would cover food and drinks at a restaurant as well as ticketed events that aren’t run by a nonprofit, Hentges said.

The existing sales tax is scheduled to expire at the end of 2023. Its proceeds can still be used to pay for capital improvements, but not operations, for the Alltel Center.

The council meeting is slated for 7 p.m. in the Intergovernmental Center.

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