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State and Lc►cai Ap�rovai Requirements Uncter �tate Law, both siaie and local approval is required before a 1QCa1 op�ion sales tax can be enacted. T�ose require�n�nis i�clude: 1) Before seel�ing legislative approval, the governing bndy (city councii} �nust adapt a resolution in s�zppart of t�e tax. It must include inforrnation nn the proposed tax rate, how the revenues wili be used, the total amour�t �o be raised �efore �he tax expires, and its es�inaated duration. 2) If authorized by the legisiature, th� question must be put to a vote at a general (no� special} election, whic�i may be e�ther a state Qr local general electian. Regional vs. Loeal Senefits T�e Departmen� o� Revenue was asked to review tl�e authoarized uses of the locai sales tax to determine if they have been regior�al in r�ature or of more Iimited benefit. Acknowleciging that varyi�g de£'ini#ions of "regional" can exis�, the De�artrnent noneiheless deternnined that a regiQnal coampaz�ent was present in all eities t�at have enacted a inca� op�ion sales tax. It was reasoned that Minneapolis and St. Pa�l, as core citie�, inherentIy carry bene�'it beyond their barde�s, w�ereas fhe other cities served as a"regional eenier" in their respective areas in greater Mz��esota. Resident vs. Non-Reside�� uapacts T�e Department of Revenue was also aslced to estimate what portion of reven�e raised th�rough t�e local o��ion sales tax coznes fro�a residenfs af the jurisdiction, as campared �n non-reside�is. There was concern among Staie Officials that ioca� jurzsdictions �hat enacted local n��ion sales taxes were no� necessarily accountable to thos� that had to pay the tax. The Depa�iment acltnowledged the data z�eeded ta make sucn estimat�s was nat readily avaiiable. However, frnm a cnnceptual standpoint, zt ca.� be den:zozastrated t�Zat communities export their lacal sales tax burden when nonresidents purc�ase ta�able ite�ras fraxn lacal businesses. Tkzere£oxe, a cammunity's ability to export its iocal sa�es tax burden is directly coz�elated with; 1) the re�ative �u�nber of residents in r�earby jurisdietions, and 2) the relative str�ngth o£ its awn economic bas�. Stated at�ather way, a community with a large retail base that selis ta�able goods, with a relativeiy small �npukation, will export a greater share of ihe sales tax buxden thaz� a car�munity vv�th the same retaii base with a large papula�ion. Rosevilie falls inta the former categozy — a reIatively small populatioz� (cc�z�pared ta the callective pnpuIatiar� arnund us) and a relative�y large reta.il base thai selis ta�able goods. Therefore, if Roseville enacted a Iocal sales tax, a substantial portion af the tax would be borne by nanresidents. Laca� Revenue Raising Ca�acity With'in i�s repa�t, tk�e De�artment af Revenue looked at the ability of a local j�at�isdiction to rais� revenue by other znea.zas, iz�cluding the prnper�y ta�. This was dor�e in an effart to determine whether jurisdictions ti�at request appraval far a iacal op�ion sales iax, �ruly ha�ve a need to da so beeause t��y �ack adequate sources typically available to lacal g4�vernments. Aitach�e�t A 2