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University of Minnesota Extension presents retail trade analysis; estimates $370,000–$740,000 annual revenue from proposed local option sales tax
Summary
A University of Minnesota Extension analyst presented a 2022-based retail trade analysis and a local option sales tax model for the City of Crookston, reporting declines in firms and customer draw since 2011 and estimating a 0.5% local option tax would generate about $370,000 annually while a 1% tax would yield about $740,000.
Ronnie, a community economic extension educator with the University of Minnesota Extension, briefed the City of Crookston City Council on a retail trade analysis and a local option sales tax model based on the most recent public revenue data available.
The presentation summarized 2022 taxable-sales data from the Minnesota Department of Revenue and other state and federal sources and compared Crookston to Polk County, northwest Minnesota and statewide benchmarks. "Eating and drinking stores are the largest contributor of taxable sales in Crookston’s economy," Ronnie said, adding that category accounted for about $9.8 million in 2022 and represented roughly 38.7% of the city’s taxable sales in the dataset presented.
The analyst highlighted several findings: the number of firms in Crookston fell from 146 in 2011 to 112 in 2022 (a loss of 34 firms); the city’s retail pull factor — a measure of how much retail demand is drawn from outside the jurisdiction — dropped from 0.82 in 2011 to 0.37 in 2022; and Crookston draws about 17% of Polk County’s retail sales. Ronnie identified building materials, vehicle parts, furniture/electronics/appliances, clothing/accessories and eating-and-drinking establishments as sectors with the strongest current shares or recruitment potential.
On specific dollar changes, Ronnie reported that lodging sales rose by about $200,000, from approximately $2.92 million in 2021 to about $3.13 million in 2022, and noted that the eating-and-drinking category declined by about 9.3% from 2021 to 2022.
Turning to a local option sales tax model (the presentation used 2021-based inputs because of 2022 reporting changes), Ronnie said nonresident (visitor) spending accounts for an estimated 39.6% of Crookston’s retail sales and resident spending 60.4%. Under those assumptions, a 0.5% local option sales tax was projected to yield about $370,000 per year (about $30 per resident), and a 1.0% tax about $740,000 per year (about $70 per resident). "A local option sales tax would burden residents more than non-residents in all categories except eating and drinking and lodging," the analyst summarized.
Councilmembers asked whether lost sales likely flowed to Grand Forks or to online retailers such as Amazon; Ronnie said both were probable factors and noted that the U.S. government classifies Crookston in the Grand Forks metropolitan statistical area. Council members and city staff discussed the idea of using sales-tax proceeds to finance projects similar to a childcare center in Warren, which the presenter and city staff said was funded with a $1 million low-interest USDA loan, donations and a local sales tax.
The presentation included a recommendation to recruit specialty stores (vehicle parts, furniture/electronics, clothing/accessories) and to continue expanding eating-and-drinking businesses to increase Crookston’s retail draw. The analyst also noted reporting-classification changes in 2022 (leisure services and some miscellaneous retail categories) that affect year-to-year comparisons.
The council received the report and had follow-up discussion about next steps and local development strategies.
