1.1 	A bill for an act
1.2 	relating to local sales taxes; allowing cities to
1.3 	impose a local sales tax if certain criteria are met;
1.4 	amending Minnesota Statutes 2004, sections 297A.99,
1.5 	subdivisions 1, 3, by adding a subdivision; 477A.016.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 297A.99,
1.8 	subdivision 1, is amended to read:
1.9 		Subdivision 1.Authorization; scope.  (a) A political
1.10 	subdivision of this state may impose a general sales tax if
1.11 	permitted by special law or if the political subdivision enacted
1.12 	and imposed the tax before the effective date of section
1.13 	477A.016 and its predecessor provision, or if the tax is allowed
1.14 	under subdivision 1a.
1.15 	(b) This section governs the imposition of a general sales
1.16 	tax by the political subdivision.  The provisions of this
1.17 	section preempt the provisions of any special law:
1.18 	(1) enacted before June 2, 1997, or
1.19 	(2) enacted on or after June 2, 1997, that does not
1.20 	explicitly exempt the special law provision from this section's
1.21 	rules by reference.
1.22 	(c) This section does not apply to or preempt a sales tax
1.23 	on motor vehicles or a special excise tax on motor vehicles.
1.24 	
EFFECTIVE DATE. This section is effective for local sales
1.25 	taxes for which the authorizing referendum is held after June
2.1 	30, 2005.

2.2 	Sec. 2. Minnesota Statutes 2004, section 297A.99, is
2.3 	amended by adding a subdivision to read:
2.4 		Subd. 1a.General authority; cities. (a) A city, or a
2.5 	group of cities acting pursuant to a joint powers agreement,
2.6 	that are located outside of the metropolitan area, as defined in
2.7 	section 473.121, subdivision 2, may impose a local sales tax of
2.8 	one-half of one percent without authorization under a special
2.9 	law provided that:
2.10 	(1) imposition of the tax is approved by the voters of each
2.11 	city pursuant to this subdivision; and 
2.12 	(2) all the conditions for adoption, use, and termination
2.13 	of the tax contained in this subdivision and subdivisions 3
2.14 	through 12 are met.
2.15 	The authority under this section is in addition to any
2.16 	local sales tax authority permitted under special law.
2.17 	(b) The proceeds of a tax imposed under this subdivision
2.18 	must be dedicated exclusively to pay for regional capital
2.19 	projects specified and approved by the voters in the authorizing
2.20 	referendum.  No proceeds may be used for normal maintenance or
2.21 	operating costs of a facility.  The proceeds may be used to pay
2.22 	for collecting and administering the tax, and to pay all or part
2.23 	of the capital and administrative costs of the development,
2.24 	acquisition, construction, expansion, improvement, and securing
2.25 	and paying debt service on bonds or other obligations issued to
2.26 	finance capital costs of the approved project.  For purposes of
2.27 	this subdivision, "regional capital project" means a project
2.28 	where at least ... percent of the users or ... percent of the
2.29 	benefit will accrue to persons or property located outside of
2.30 	the city limits.
2.31 	(c) Imposition of the local tax is subject to approval by
2.32 	the voters of the political subdivision at a general election.
2.33 	The specific project must be designated at least 90 days before
2.34 	the referendum on the imposition of the tax is conducted.  The
2.35 	question put to the voters in order to approve imposition of the
2.36 	tax must contain at minimum the following information:
3.1 	(1) a description of the specified project, including how
3.2 	this project will benefit persons or property outside of the
3.3 	city limits;
3.4 	(2) the maximum amount that will be spent on the project,
3.5 	including proceeds from bonds;
3.6 	(3) the maximum time that tax will be imposed in order to
3.7 	raise sufficient revenues to fund the project; and 
3.8 	(4) if general obligation bonds are to be issued for the
3.9 	project, the maximum amount of the bonds.
3.10 	(d) The city may request authority to fund more than one
3.11 	project from the sales tax at the time of the imposition,
3.12 	provided that the use of the tax for each project is voted on
3.13 	separately and the question related to each project meets the
3.14 	requirements under paragraph (c).
3.15 	(e) A city may issue general obligation bonds to pay the
3.16 	costs of projects specified in the referendum authorizing
3.17 	imposition of the tax.  The approval of the question under
3.18 	paragraph (c) meets the requirement for elector approval for
3.19 	issuance of bonds under section 475.58, subdivision 1.  The debt
3.20 	represented by the bonds must not be included in computing any
3.21 	debt limitations applicable to the city, and the levy of taxes
3.22 	required by section 475.61 to pay the principal or any interest
3.23 	on the bonds must not be subject to any levy limitations or be
3.24 	included in computing or applying any levy limitation to the
3.25 	city.
3.26 	(f) The tax, if enacted, expires when the specified revenue
3.27 	has been raised or the maximum time in which the tax is in
3.28 	effect under the resolution is reached, whichever is sooner.
3.29 	Any tax imposed under this subdivision must expire no later than
3.30 	20 years after imposition.  The governing board of the city may,
3.31 	by ordinance, terminate the tax at an earlier date.
3.32 	
EFFECTIVE DATE. This section is effective for local sales
3.33 	taxes for which the authorizing referendum is held after June
3.34 	30, 2005.

3.35 	Sec. 3. Minnesota Statutes 2004, section 297A.99,
3.36 	subdivision 3, is amended to read:
4.1 		Subd. 3.Requirements for adoption, use, termination.
 4.2 	(a) Imposition of a local sales tax is subject to approval by
4.3 	voters of the political subdivision at a general election.
4.4 	(b) The proceeds of the tax must be dedicated exclusively
4.5 	to payment of the cost of a specific capital improvement which
4.6 	is designated at least 90 days before the referendum on
4.7 	imposition of the tax is conducted.
4.8 	(c) The tax must terminate after the improvement designated
4.9 	under paragraph (b) has been completed.
4.10 	(d) After a sales tax imposed by a political subdivision
4.11 	has expired or been terminated, the political subdivision is
4.12 	prohibited from imposing a local sales tax for a period of one
4.13 	year.  Notwithstanding subdivision 13, this paragraph applies to
4.14 	all local sales taxes in effect at the time of or imposed after
4.15 	May 26, 1999.
4.16 	
EFFECTIVE DATE. This section is effective July 1, 2005.

4.17 	Sec. 4. Minnesota Statutes 2004, section 477A.016, is
4.18 	amended to read:
4.19 	477A.016 NEW TAXES PROHIBITED.
4.20 	No county, city, town or other taxing authority shall
4.21 	increase a present tax or impose a new tax on sales or income,
4.22 	except as provided in section 297A.99, subdivision 1a.

4.23 	EFFECTIVE DATE. This section is effective July 1, 2005.