Restaurant closure amid COVID-19 impacts locally generated taxes and the projects that benefit

Restaurant closure amid COVID-19 impacts locally generated taxes and the projects that benefit

MANKATO, Minn. (KEYC) - With restaurants and businesses partially or completely closed amid the COVID-19 pandemic, local taxes that help offset expenses for several city operations aren’t being generated as frequently.

This year, the city of North Mankato implemented a Food and Beverage Tax to help offset operational and maintenance costs at Caswell Park.

But just as quickly as the tax was implemented, the amount generated could see a decline, according to North Mankato Finance Director Kevin McCann.

“In January, we got close to $5,000. For February’s, we’re still having a few more payments trickle in, and then now March, I’m sure will be way down," McCann said.

The Food and Beverage Tax was meant to be a new source of revenue for the park to help keep more money in the city’s general fund for other uses.

But if needed, money from the general fund could still be used.

“Right now we’re just proceeding as normal. We’ll see where things are at in the next couple of months," McCann said.

The city of North Mankato also issued bonds ten years ago to help construct an interchange on Highway 14.

That is now being repayed with Local Options Sales Tax, which is primarily used to help with debt repayment.

“There is some money extra in the fund to cover some shortfalls for the short term, but if things continue, we’d have to look at other revenue sources," McCann said.

McCann said general fund dollars could also be used to help offset some of those costs.

And, unlike the Food and Beverage Tax, Local Options Sales Tax can still be generated online.

With people staying at home, an uptick in online shopping could still generate tax revenue.

Next door, the city of North Mankato is also seeing an impact, according to Mankato City Manager Patrick Hentges.

“This is a busy time of year for restaurants and bars," Hentges said.

In a typical month, the city of Mankato gets around $400,000 in Local Options Sales Tax and Food and Beverage Tax combined.

“But I suspect that you’re going to see, you know, $100,000 or more reduction of that $400,000," Hentges said.

Right now, the city is making repayments on operations like the Mankato Civic Center and Franklin Rogers Park.

Any local matches on state water mitigation funding will also come from sales tax.

Hentges said the uncertainty lies in how much is available for new projects.

Because there is a lag of Local Options Sales Tax payments, the city won’t really know the financial impact until the next couple of months, where the picture will then become more clear.

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