Albert Lea’s half-percent local-option sales tax proposal fell out of a tax omnibus bill discussed in a House-Senate conference committee, and officially died Thursday.

The 10-year sunset sales tax would have allowed the city to issue $14.5 million in bonds for lake improvements and downtown revitalization projects.

While the news disappointed area legislators and proponents of the sales-tax proposal, and amplifies their anxiety for the future of Albert Lea, opponents still believe that funding those projects through a sales tax is unsound.

“Basically it comes down to the local control issue: If the people have a right to decide issues in their own community,” said Sen. Grace Schwab, R-Albert Lea, summarizing her argument in the session.

“If we are going to get the local-option sales tax done, I am more and more convinced that we ought to make a statewide change, and not try to do this piecemeal,” said Rep. Dan Dorman, R-Albert Lea.

About 15 communities brought sales tax proposals to St. Paul, but they met strong opposition, especially in the House tax committee, led by Republican Ron Abrams. Only six communities in the St. Cloud area, who will use the revenue primarily to improve their regional airport, finally won approval.

The legislative impasse disappointed those who counted on the sales tax.

“There is no other way that we can clean up the lakes and watersheds without the sales tax,” said Don Sorenson, a member of the Albert Lea Lake Management Committee and Destination: Albert Lea.

His committee has been working on putting a lake-management plan together, which includes the construction of a new dam and extensive dredging in the west part of Albert Lea Lake. The sales tax could have been a major funding source for matching state and federal grants.

According to Sorenson, the sales tax is the most acceptable way for the residents to share the expense for the lake, because other methods involve a property-tax increase in one way or another.

He sees it is unfair that some bigger cities are permitted to have the sales tax while smaller cities are not.

“Minnesota is supposed to be a progressive state. But when it comes to the issues of a rural community, we get shot down,” Sorenson said.

But Paul Moore, another lake committee member, has a different view.

“A sales tax is the most regressive form of taxation,” Moore said. “A property tax or income tax is based on one’s ability to pay, while the sales tax is applied no matter what one’s income is.”

He is concerned that the extra expenditure for the sales tax would hurt a fixed-income household disproportionately.

In the lake committee, Moore consistently opposed dredging, warning of its possible negative effects on the environment and opposed proponents who tried to seek an appropriation from the sales tax revenue for the project.

The lake management goal is to construct both an environmentally sound plan and a funding method that is fair to the people, Moore said.