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The Rochester City Council decided on a method for distributing $5 million to 17 surrounding communities as required by the Minnesota Legislature, sharing the newly reauthorized city sales tax dollars with these municipalities to be used for economic development projects.

The surrounding communities will receive funding based on their population, a measure that upset council member Michael Wojcik, who recommended in an earlier committee of the whole meeting that the communities submit proposals for the funding and that Rochester city staff have oversight over the projects.

“I have a fundamental issue with collecting taxes and not overseeing how they’re spent,” he said.

“I have good faith that people are going to make good decisions with it, but it doesn’t change the fact that we’re writing the checks and we’re not going to have any oversight into what the projects are. I think that’s a fundamental mismanagement situation that unfortunately the state legislature put us into.”

Rochester became the first city in Minnesota required by the Legislature to vote on its sales tax, and also the first required to share it. Wojcik pointed out that Lanesboro, which is in the district of Representative Greg Davids, was not required to do either of these things when adopting its local sales tax. Davids was the former chair of the House tax committee which placed these restrictions on Rochester.

Wojcik also criticized the Legislature’s decision to include some communities in the list of those receiving funding, but not other surrounding communities that were similar in size to the smallest on that list.

City staff warned that if Rochester assumes an oversight role over the projects, it would come with the possibility of liability.

Wojcik rejected that notion, citing the lack of direction given by the legislature.

“However we do it, we’re going to be following the law.”

Interim council president Randy Staver stated that he was comfortable with the process that was developed, which requires oversight from the state auditor’s office and biannual reports to the city of Rochester.

“I do believe we have an equitable formula going forward,” he said. “It’s not perfect, but we’re playing the hand we we’re dealt.”

Wojcik further objected to the plan to distribute the funding at the beginning of the sales tax period, before the money has been collected. He calculated that by giving the communities the funding at the beginning of the sales tax period, half on July 31 of this year and half on the same date in 2014, instead of at the end of the period, Rochester was wasting $1.2 million dollars by bonding that money. He suggested offering the funding sooner or later to the communities with the understanding that the difference would be accounted for.

The council voted 5-1 to authorize the distribution plan with each of the communities putting the funding in a separate account and the mayor and council of those communities determining how to use the funds given that they can only be used for capital costs for economic development projects and may not relocate a business from another Minnesota city without the approval of that city. Rochester will also be held harmless in how the communities choose to use the funding.

“These are our partners and our neighbors in this region and I think we have to trust that they’re going to do it right,” said council member Ed Hruska.

“We all know we didn’t ask for this. We got it, and we’re going to do our best with it.”