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Local revenue-raising
<br />capacity sultants at the time of implementation. City-level survey data, not currently avail-
<br />able, might be the best method for creating direct estimates of the real impact of
<br />local sales taxes. Collection of this data could strengthen a proposal to secure
<br />legislative and local approval of a new local sales tax request.
<br />The general policy implications of tax exporting will be discussed in a later section
<br />of this report.
<br />Local Revenue Raising Capacity and Alternative Revenue Sources
<br />Local Revenue-Raising Capacity
<br />Another area identified for evaluation was the ability of jurisdictions to raise
<br />revenue by other means, including the local property tax. The department was
<br />asked to provide comparative data on local capacity to raise revenue from various
<br />sources, including the property tax; local property tax rates (tax effort); and how
<br />communities without local sales taxes fund projects that are funded with local sales
<br />tax revenue in other communities.
<br />Table 2
<br />CY 2001 Revenues, cities over 2500
<br /> Statewide total
<br />Total Revenues $3,433,265,890
<br />"Own source" revenue
<br />Local sales tax 85,559,245
<br />Property taxes 837,890,401
<br />Tax increments 297,415,538
<br />Franchise taxes 72,724,954
<br />Hotel/motel taxes 23,540,675
<br />Gravel, gambling taxes 1,606,184
<br />Special assessments 215,498,557
<br />Licenses and permits 126,539,555
<br />subtotal $1,660,775,109
<br />Intergovernmental reve nues
<br />Federal grants 115,528,688
<br />State grants 839,134,247
<br />County grants 25,679,414
<br />Local grants 36,561,580
<br />subtotal $1,016,903,929
<br />Fees, fines, interest
<br />Fees, service charges 305,485,816
<br />Fines and forfeits 35,979,912
<br />Interest earnings 193,097,134
<br />All other revenue* 221,023,990
<br />subtotal $ 755,586,852
<br />percent
<br />100.0
<br />2.5
<br />24.4
<br />8.7
<br />2.1
<br />0.7
<br />0.05
<br />6.3
<br />3.7
<br />48.4
<br />3.4
<br />24.4
<br />0.7
<br />1.1
<br />29.6
<br />8.9
<br />1.0
<br />5.6
<br />6.4
<br />22.0
<br />*Includes donations, refunds, reimbursements, principal payments
<br />on loans receivable and sales of property.
<br />Source: Revenues, Expenditures, and Debt of Minnesota Cities Over
<br />2,500 in Popu/ation, Minnesota Office of State Auditor, Year Ending
<br />December 31, 2001.
<br />Table 2, at left, shows the composition of city revenue
<br />for all cities with populations over 2,500, taken as a
<br />group, and table 3 (facing page) shows how the
<br />revenue shares of each of the 10 cities with local sales
<br />taxes compare to those of the average city over 2,500
<br />in population.6 These tables provide a look at how
<br />local sales tax cities vary from other cities in regard to
<br />their dependence on different revenue sources.
<br />Generally, table 3 shows that relative to the average
<br />city, cities with local sales taxes tend to be less depen-
<br />dent on local property taxes, tax increment revenue,
<br />and license and permit revenues, fines and forfeit
<br />revenue, and interest earnings. They depend more on
<br />state grants, and, of course, local sales taxes.
<br />Capacity to Raise Revenue. Measures of local revenue
<br />raising capacity are found in many state aid formulas.
<br />They measure how much revenue would be raised
<br />locally if a standard, or uniform, tax rate is applied to
<br />the tax base or bases of each community. Depending
<br />on the policy context, this could be done for all tax
<br />bases such as taxable property, retail sales, resident
<br />income, and others, or for a specific tax base. For our
<br />purposes, it is useful to compare the spatial distribu-
<br />tion of taxable retail sales to that of the local property
<br />tax. This is provided in table 4, on the next page.
<br />6. Revenues, Expenditures, and Debt of Minnesota Cities
<br />Over 2,500 in Population, Minnesota Office of State
<br />Auditor, Year Ending December 31, 2001.
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