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Background Authorized Uses of Current and Proposed Local Sales Taxes Local general sales and use taxes have been proposed and authorized in Minnesota since 1971.One county (Cook) has a local general sales and use tax. However, excluding St. Paul and Minneapolis, cities with local general sales and use taxes have mostly been larger regional cities with a particular project need. Authorized uses of local general sales and use taxes vary and do not lend themselves to easy categorization. Current uses include a hospital, two airports, two water/ sewer infrastructure projects, a park, and three civic/convention centers. See Appen- dix Cfor amore complete listing. There have been several projects where local sales tax was authorized by the legisla- Authorized uses ture but not imposed. These projects included three convention centers, two community centers, one sewer project, one stadium project, and one economic development project. Reasons for not imposing the tax include: 1) the question was not put on the ballot (three times), 2) the city council did not pass the ordinance (once), and 3) the local referendum failed (six times). See Appendix G for an annotated listing. Many more local sales and use taxes have been proposed than have been approved by the legislature. In general, there is no substantial difference between the types of projects approved and those not approved. Responding to the growing number of proposed local sales and use taxes, and recommendations from a 1996 Sales Tax Advisory Committee, a standardized approval process and uniform local sales tax features were enacted by the 1997 Legislature (MS. 297A.99).s The 19971egislation provided that: __ apolitical subdivision may impose a general sales tax if permitted by special law, __ the political subdivision shall adopt a resolution prior to the legislative request, __ imposition after approval is subject to voter approval in the political subdivision, __ the local tax base be the same as the state tax base, __. a complementary local use tax be enacted, .__ exemptions for the local tax parallel the state exemptions, and quarterly `begin' and `end' dates be used. State and Local Approval Requirements Approval Because of the statutory prohibition against new local sales taxes, special legislation is needed for authorization. The Minnesota sales and use tax law sets forth the requirements for approval of local sales taxes, unless the special law provides an exemption from the provisions (M.S. 297A.99). The requirements are that: Approval requirements .__ Before seeking legislative approval, the governing body (city council, county or township board) must adopt a resolution in support of the tax. It must include information on the proposed tax rate, how the revenues will be used, the total amount to be raised before the tax expires, and its estimated duration. .__ If authorized by the legislature, the question must be put to a vote at a general (not special) election, which maybe either a state or local general election. 5. This law change initially applied only to new authorizations, but beginning in calendar year 2000, the changes applied retroactively to existing local sales taxes. For more information see Local Sales Taxes in Minnesota, Information Brief, Minnesota House Research Depart- ment, October, 2003, at http://www.house.leg.state.mn.us/hrd/pubs/localsal.pdf.