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The Departme�t's �'indings s�ow that relatzve ta t�e typica� city, ci�ies with local sate,s taxes tend to be less dependent on �ocal property t�es and other lacal funding sources. But this does not suggesi that property ta�es are lower in cities that have lacal sales ta�. Generally sp�aking, cities that hav� a local sa1�s tax alsr� have higher property tax rates wk�en coxnpared tv citie� with similar population. The likely reason. �s that cities wzth a local sales tax a�sa have greater de�nands far services t�at extend bayond their bo�de:rs — ihe byprad�zct af being a regional service centerr. Sr�mma►y of the Policy Issues The; report a�tlines vario�s poi'rcy issues rela�ed to the e�actment of Ioca� option sa.les taxes. In surnn�azy, the r��aprt drew ��o� pzeviau� wz�itings subrnztted by the Na�zonal Canference a�' State Legislatures, whorn in i�eir 199'i report `Critical Issues in State-Local Fiscal Policy, a Guide to Local Qptians Tcrxes' affered the following: Local option taxes allow local people to have mo�e control over tax decisions and impYOVe local,fl'exibility to meet regional service needs. HoweveY, they may create local accountabilily p�oblems, hamper state flexibility and impose additional administrative and complianee costs on businesses and individuals. They may also affect the balance and fairness of the state-ZoeaZ systefn and create harmfu2 comp�tition bet�veen local gove�nrnents. Reviewin� P�ublic Cornments As �art of their st�dy, the Department of Revenue conducied public rneeiz�gs izz 2QQ3 to soIicit comm.ents on lacal sales taxes. Meetings were held in Brainerd, Rochester, and St. �'aui. Attendees incIuded; ciiy ar�d county officiais, legisiatnrs, indi�riduai citizens, business organizations, and associations representing cities a�d counties. As is noted in the report, the comments were generally centered an criticis� o� the current process, apprn�riateness of a local sales tax as a compo�ent of state and Iocal �evez�ues, and iss�zes raised by �he prospect of wider loeal authoriiy for sales taxes. Criiicis�rxa. a�d discontent were �bserved wiih respect �o the proeess of authorizing Iocal sales taxes. T�� Iack af conszstezat and objective crz�eria, meant some eziies were granted ap�i�n�raI whereas ath.ers wer� not, anc� not always for consistent reasons. Concern was also raised that th.e appro'val pracess was driven by politics rather than by merii. Alt�ough �:a t�az�i�nzty was reaci�ed on the appropriate role of a local sa�es tax as a reven�e toal, it was ac�z�awledged by ma�y that larger aammunities with a relatively sirong econo�nic base are better able to raise loeal zanonies thaaa t�eir szxaaller countezparts. Az�d that this basic fact shnuld be a considera�ion in granting approval for a local optian sales tax. Public cornment was also received wit� xespect �o req�iring wider �ocal au�oriYy before granting approval of local sales taxes. It was sugge�ted that far �oeal taxes �hat would be paid primariiy by those who iive outside the taxing jurisdictinn, �l-ie referendu� ought to be a regional one rat�er t�an c4n�ned to the �ing jurisdictian. Fi�ally, considerab�e camment was mac�e regarding a general desire inr cities to demonstrate a regio�al bene£'rt that overlaps multiple juri�dic�io�s as criteria for approval. Alt�ough most would acktaawl�d�e �he di£�cul�.y in defnin� what "regional benefit" �night be. Attachrnent A 3