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4. Summary and Conclusions Local sales tax plays a valuable but supporting role in the larger picture of state and local government fmancing. The local sales tax is best used as a mechanism for the fmancing of large, special, multi-jurisdictional capital projects rather than as a replacement for property tax revenue to fund general expenses of local government. The current process for authorizing new or extending previously approved local sales taxes is widely perceived as being too subjective and political. To reduce the number of unsuccessful applications for local tax authority and to demonstrate a more objective decision making process, there should be objective criteria and a more straightforward process for consideration of these proposals. The criteria should include a requirement that the tax be used to fund a capital project. The community or communities proposing the tax should demonstrate a need for the tax as indicated by an insufficient property tax plus aid revenue base, and that the project would not otherwise have the funding to be accomplished. A proposal would be considered much stronger coming from amulti-jurisdictional compact. A proposal should have already been approved in a referendum. A strong proposal would include an incidence study of the tax and a referendum passed by jurisdictions substantially affected both by the benefit and the incidence of the tax. New proposals and proposed extensions of existing authorizations should have a clearly defined ending date after which a referendum must be held and reauthoriza- tion granted. This requirement should obviate the need for a reverse referendum. The legislature should consider applying a sunset to existing authorizations as well. Finally, the authorization of local sales tax proposals should remain with the legislature. While an administrative process within the Department of Revenue could be developed, there would still be the need for legislative review of that process and clear policy guidance to the department. If some or all of the recom- mendations contained herein are adopted, the quality of local sales tax proposals should improve, and the number of proposals may decline. This would reduce the burden now experienced by the tax committees and their staffs. Furthermore, the number of local sales taxes and the uses to which they should be put are significant policy issues that are best debated and decided in a legislative arena. Recommendations The local sales tax is best used as a mechanism for the financing of large, special, multi jurisdictional capital projects. 23