Minnesota Legislature
HF 2839
as introduced - 93rd Legislature (2023 - 2024) Posted on 03/13/2023 10:12am
Current Version - as introduced
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A bill for an act
relating to taxation; local sales and use; allowing cities to impose a local sales tax
if certain criteria are met; amending Minnesota Statutes 2022, sections 297A.99,
subdivisions 1, 3; 477A.016; proposing coding for new law in Minnesota Statutes,
chapter 297A.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2022, section 297A.99, subdivision 1, is amended to read:
Subdivision 1.
Authorization; scope.
(a) A political subdivision of this state may impose
a general sales taxnew text begin :
new text end
(1) under section 297A.992deleted text begin ,deleted text end new text begin ;
new text end
(2) under section 297A.993deleted text begin ,deleted text end new text begin ;
new text end
(3) new text begin under section 297A.9935;
new text end
new text begin (4) new text end if permitted by special lawdeleted text begin ,deleted text end new text begin ;new text end or
deleted text begin (4)deleted text end new text begin (5)new text end if the political subdivision enacted and imposed the tax before January 1, 1982,
and its predecessor provision.
(b) This section governs the imposition of a general sales tax by the political subdivisionnew text begin
authorized under special lawnew text end . The provisions of this section preempt the provisions of any
special law:
(1) enacted before June 2, 1997deleted text begin ,deleted text end new text begin ;new text end or
(2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
provision from this section's rules by reference.
(c) This section does not apply to or preempt a sales tax on motor vehicles. Beginning
July 1, 2019, no political subdivision may impose a special excise tax on motor vehicles
unless it is imposed under section 297A.993.
(d) A political subdivision may not advertise or expend funds for the promotion of a
referendum to support imposing a local sales tax and may only spend funds related to
imposing a local sales tax to:
(1) conduct the referendum;
(2) disseminate information included in the resolution adopted under subdivision 2, but
only if the disseminated information includes a list of specific projects and the cost of each
individual project;
(3) provide notice of, and conduct public forums at which proponents and opponents on
the merits of the referendum are given equal time to express their opinions on the merits of
the referendum;
(4) provide facts and data on the impact of the proposed local sales tax on consumer
purchases; and
(5) provide facts and data related to the individual programs and projects to be funded
with the local sales tax.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2023.
new text end
Sec. 2.
Minnesota Statutes 2022, section 297A.99, subdivision 3, is amended to read:
Subd. 3.
Legislative authority required before voter approval; requirements for
adoption, use, termination.
(a) new text begin If the local sales tax does not meet the requirements for
imposition under section 297A.9935, new text end a political subdivision must receive legislative authority
to impose a local sales tax before submitting the tax for approval by voters of the political
subdivision. Imposition of a local sales tax is subject to approval by voters of the political
subdivision at a general election. The election must be conducted at a general election within
the two-year period after the governing body of the political subdivision has received
authority to impose the tax. If the authorizing legislation allows the tax to be imposed for
more than one project, there must be a separate question approving the use of the tax revenue
for each project. Notwithstanding the authorizing legislation, a project that is not approved
by the voters may not be funded with the local sales tax revenue and the termination date
of the tax set in the authorizing legislation must be reduced proportionately based on the
share of that project's cost to the total costs of all projects included in the authorizing
legislation.
(b) The proceeds of the tax must be dedicated exclusively to payment of the construction
and rehabilitation costs and associated bonding costs related to the specific capital
improvement projects that were approved by the voters under paragraph (a).
(c) The tax must terminate after the revenues raised are sufficient to fund the projects
approved by the voters under paragraph (a).
deleted text begin
(d) After a sales tax imposed by a political subdivision has expired or been terminated,
the political subdivision is prohibited from imposing a local sales tax for a period of one
year.
deleted text end
deleted text begin (e)deleted text end new text begin (d)new text end Notwithstanding paragraph (a), if a political subdivision received voter approval
to seek authority for a local sales tax at the November 6, 2018, general election and is granted
authority to impose a local sales tax before January 1, 2021, the tax may be imposed without
an additional referendum provided that it meets the requirements of subdivision 2 and the
list of specific projects contained in the resolution does not conflict with the projects listed
in the approving referendum.
deleted text begin (f)deleted text end new text begin (e)new text end If a tax is terminated because sufficient revenues have been raised, any amount
of tax collected under subdivision 9, after sufficient revenues have been raised and before
the quarterly termination required under subdivision 12, paragraph (a), that is greater than
the average quarterly revenues collected over the immediately preceding 12 calendar months
must be retained by the commissioner for deposit in the general fund.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2023.
new text end
Sec. 3.
new text begin
[297A.9935] LOCAL SALES AND USE TAX; AUTHORITY FOR CITIES.
new text end
new text begin Subdivision 1. new text end
new text begin Authorization; rates. new text end
new text begin
(a) A city, or a group of cities acting under a joint
powers agreement, may impose a local sales and use tax of up to one-half of one percent
without authorization under a special law provided that all the conditions for adoption, use,
and termination of the tax contained in this section and section 297A.99, subdivisions 4 to
12a, are met. A city may not impose a tax under this section while it imposes a local sales
tax under a special law.
new text end
new text begin
(b) If a city or group of cities imposes a tax under this section at a rate less than one-half
of one percent, the city or cities may increase the rate up to a rate of one-half of one percent
without authorization under a special law provided that all of the conditions of this section
and section 297A.99, subdivisions 1, paragraph (d), and 4 to 12a, are met.
new text end
new text begin Subd. 2. new text end
new text begin Allowed use of revenue. new text end
new text begin
(a) The proceeds of a tax imposed under this section
must be dedicated exclusively to pay for specific capital projects approved by the voters in
the authorizing referendum. No proceeds may be used for normal maintenance or operating
costs of a facility or properties owned by a city or group of cities. The proceeds may be
used to pay for all or part of the capital costs of the development, acquisition, construction,
expansion, and improvement. The proceeds may also be used to secure and pay debt service
on bonds or other obligations issued to finance the capital costs of a regional project.
new text end
new text begin
(b) Allowed capital projects include:
new text end
new text begin
(1) a single building or structure, including associated infrastructure needed to safely
access or use the building or structure;
new text end
new text begin
(2) improvements within a single park or named recreation area; or
new text end
new text begin
(3) a contiguous trail.
new text end
new text begin Subd. 3. new text end
new text begin Resolution required. new text end
new text begin
(a) At least three months prior to holding a referendum
to impose the tax, a city must provide to the commissioner of revenue a resolution approved
by the city's governing board that shows the following:
new text end
new text begin
(1) the specific project or projects to be funded by the tax meet the requirements of
subdivision 2;
new text end
new text begin
(2) the date on which the referendum will be held;
new text end
new text begin
(3) the maximum amount to be raised by the tax that may be used for each of the specified
projects, excluding issuance and interest costs for any related bonds; and
new text end
new text begin
(4) the maximum time that the tax may be imposed.
new text end
new text begin
(b) The commissioner shall certify that the requirements under this section are met, and
the city shall provide any additional information on the commissioner's requests in order
to make that determination. The commissioner's decision is final.
new text end
new text begin Subd. 4. new text end
new text begin Referendum required. new text end
new text begin
(a) A city or group of cities may not impose a tax under
this section unless approved by the voters of each city at an election held on the first Tuesday
after the first Monday in November.
new text end
new text begin
(b) The question put to the voters at the referendum authorizing the vote must include
the following information:
new text end
new text begin
(1) information on the specific project or projects to be funded by the proceeds of the
tax;
new text end
new text begin
(2) the maximum amount of sales tax revenues that will be used to fund each project,
not including any issuance and interest costs for related bonds; and
new text end
new text begin
(3) the maximum length of time that the tax will be imposed, which must not exceed 20
years from the date the initial tax was imposed without regard to an increase in the rate.
new text end
new text begin
(c) If the approved resolution authorizes the city or group of cities to impose a tax for
more than one project, then there must be a separate question approving the use of the tax
revenue for each project. A project that is not approved by the voters must not be funded
with the local sales tax revenue and the termination date of the tax and the maximum amount
to be raised by the tax set in the approved resolution must be adjusted proportionately based
on the share of that project's cost to the total costs of all projects included in the approved
resolution.
new text end
new text begin
(d) If the referendum is not held on the date contained in the resolution or the next
following Tuesday, if allowed under section 205.105, the authority for imposing the tax
expires.
new text end
new text begin Subd. 5. new text end
new text begin Bonding authority. new text end
new text begin
A city may issue general obligation bonds to pay the costs
of projects specified in the referendum authorizing imposition of the tax. The approval of
the question under subdivision 3 meets the requirement for elector approval for issuance of
bonds under section 475.58, subdivision 1. The debt represented by the bonds is not included
in computing any debt limitations applicable to the city. The levy of taxes required by section
475.61 to pay the principal or any interest on the bonds is not subject to any levy limitations
and is not included in computing or applying any levy limitation to the city.
new text end
new text begin Subd. 6. new text end
new text begin Expiration; new authorization. new text end
new text begin
(a) A tax imposed under this section expires
at the earlier of when (1) the specified revenue has been raised, or (2) the maximum time
in which the tax is in effect under the resolution required in subdivision 2 is reached. Any
tax imposed under this section expires no later than 20 years after the date the initial tax
was imposed without regard to an increase in the rate allowed under subdivision 1. The
governing board of the city may, by ordinance, terminate the tax at an earlier date.
new text end
new text begin
(b) A city must not impose a new local sales and use tax under this section while a
previously authorized tax under this section is still imposed.
new text end
new text begin
(c) If a tax is terminated because sufficient revenues have been raised, any amount of
tax collected by the commissioner pursuant to section 297A.99, subdivision 9, after sufficient
revenues have been raised and before the quarterly termination required under section
297A.99, subdivision 12, paragraph (a), that is greater than the average quarterly revenues
collected over the immediately preceding 12 calendar months must be retained by the
commissioner for deposit in the general fund.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2023.
new text end
Sec. 4.
Minnesota Statutes 2022, section 477A.016, is amended to read:
477A.016 NEW TAXES PROHIBITED.
No county, city, town or other taxing authority shall increase a present tax or impose a
new tax on deleted text begin sales ordeleted text end income.new text begin No county, city, town, or other taxing authority shall increase
a present tax or impose a new tax on sales except as authorized in chapter 297A.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2023.
new text end