2006_1016_Packet - Laserfiche WebLink

Home

�� 'M� � � �.,j.,,r► �J : —.. _�� � ' � Ta: Mayor and Giiy Co�ncil Frort�: Chris Miller, Interirn City Manage � D�ie: Octaber 16, 2006 Re: Consideration o� Special Legislation fc�r Local Option. Sales Ta� Introduction U�der curren� State Law�, municipalities are preven�ed ira�n enactiz�g a sales tax wi�hout first reeeiving Iegislative approval and Ioca� approval by a refexenduzn vote. Typica�ly, a lacal optio� sales ta�c is dedicated far a s�aecific prr�jeci or i�itiative az�d "ancludes a surzset date. Legzslative approvals granted to municzpalities in recent years hav� be�n iz�d ip prajects that �ave regianal bene�'�t. In 2004, the Mi�esota Departmeni of Revenue issued a repori t�at examaned the history oi the local pptian sales tax, and its �znderlying �ari�czples arad palzcy issues. The �'ollawing subjecfi �rzatters were I�ighlag�ted in the Report. History of the Laca! Option Sales Tax The report notes that Minnesota is a relati�vice newcomer tn s�a�e and local taxes espeeiaily the Iocal sales �ax. Min�esota enacted a s�atewide sales tax in 1967, becaming t�e second-to-iast sta�e ta do so. Tn 1971, the legisla�ure enaetad some sweeping tax reforms which became widely knawn as the `Min�zesota Miracle'. The reforms were designed to generate rr�ore monies a� the Siate level �hat cotild then be distri�uted to Iocal �avernments in ihe form of `State aid', based on cer�ain criteria including local "need". Because the refaz�ms were deszgned to better equalize wealth acxoss a broad region, �tate Leaders realized ihat it had to restrict local gover�nent's ability to I�vy sates tax indepcnderztly. As a result, as part of the 1971 refor�n package, the Legislature enacted a prohibition against new or increased 1ncal taaces nn sales or incnrne. At t�e tirr�e c�f the 1971 �rohibition, five Minnesota czties �iad a�xeady aclapted �acal sales taxes, they include�: Mznx�eapalis, St. Paul, Duluth, Rachester, anct Blaamir�gton. Enabli�g legislatian is no�c�v rec��ired ta implement a loeal sales tax. Taday, 21 local jurisdictions have a locaI sales tax af either 0.50% or 1.OQ%. They i�clucie: Alber� Lea B�ter CQak County Duluth Minneapalis New Ulm Si. C1oud Area* �t. Pau� Bemidji Brair�erc� Her�nantown Mankaio Proctor Rochesier Two Harbors W�llmar * includes; St. C1r�ud, Sartell, Saulc Rapids, S�. Augusta, St. Jaseph, and Waite Park Attack�z�ent A