The Free Press, Mankato, MN

Local News

September 8, 2008

Kato Council passes hospitality tax

By Dan Linehan

MANKATO — Restaurant fare and ticketed events in Mankato will be a little more expensive beginning Jan. 1, 2009.

The Mankato City Council passed a half-percent sales tax Monday to shore up the Alltel Center’s operating deficit.

The existing half-percent sales tax — which overlaps with the new tax but covers more goods — has traditionally paid for both the operations and upkeep costs of the Alltel Center.

But earlier this year, Mankato went to the Legislature to extend the sales tax from 2015 to 2023.

The Legislature agreed, but changed the sales tax so that it no longer paid for operations at the Alltel Center.

That left a gap in the budget of about $250,000 per year, the amount of the Alltel Center’s deficit.

Instead of a larger property tax increase, the city asked for authority to institute another sales tax. The Legislature agreed, allowing a one-percent “hospitality tax,” though the city has decided to levy half that amount and is expecting to generate about $400,000 annually.

Two business owners testified against the tax at the Monday evening public hearing, saying they’d have to pass on the cost to customers.

Andy Conn, owner of the Mankato Applebee’s restaurant, said the tax will be one more in a series of painful government actions in recent months.

A liquor ordinance passed late last year ended specials after 11 p.m., which Conn said has cost him $14,000 in bar sales. Minimum wage increases have also affected his bottom line.”

“If the civic center can’t afford to pay for itself, I don’t think it should expand,” he said.

Larry Bowers, general manager of the Kato Entertainment Center for 26 years, asked the council why a referendum was needed for the existing sales tax but not the new one.

Hentges replied that the Legislature didn’t require a referendum.

Bowers also said the city should work harder at communication with hospitality businesses. He said neither he nor others in the industry were contacted about the new tax.

Council President Mike Laven agreed with the business owners, to a point.

He acknowledged that businesses will lose some customers with higher prices, but said the alternative of higher property taxes was a worse choice.

Councilman Vance Stuehrenberg called the tax unfair and voted against it. Councilman Charlie Hurd was absent.

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