SF 375

Introduction - 94th Legislature (2025 - 2026)

Posted on 01/28/2025 12:58 p.m.

A bill for an act
relating to taxation; sales and use; modifying authority and requirements for local
sales and use taxes; amending Minnesota Statutes 2024, section 297A.99,
subdivisions 1, 1a, 3; proposing coding for new law in Minnesota Statutes, chapter
297A; repealing Minnesota Statutes 2024, section 297A.99, subdivision 3a.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, 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 tax (1) under section 297A.9915, (2) under section 297A.992, (3) under
section 297A.9925, (4) under section 297A.993, (5) if permitted by special law, or (6) 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 subdivision.
The provisions of this section preempt the provisions of any special law:

(1) enacted before June 2, 1997 deleted text begin , or deleted text end new text begin ;
new text end

(2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
provision from this section's rules by reference deleted text begin . deleted text end new text begin ; or
new text end

new text begin (3) enacted before July 1, 2025.
new text end

(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 the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2024, section 297A.99, subdivision 1a, is amended to read:

Subd. 1a.

Requirements.

Local sales taxes are to be used instead of traditional local
revenues only for construction and rehabilitation of capital projects when a clear regional
benefit beyond the taxing jurisdiction can be demonstrated. deleted text begin Use of local sales tax revenues
for local projects decreases the benefits to taxpayers of the deductibility of local property
taxes and the state assistance provided through the property tax refund system and increases
the fiscal inequities between similar communities.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2024, section 297A.99, subdivision 3, is amended to read:

Subd. 3.

Legislative authority required before voter approval; requirements for
adoption, use, termination.

(a) 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 deleted text begin termination date
of the tax set deleted text end new text begin total amount for all projects allowed new text end in the authorizing legislation must be
reduced deleted text begin proportionately based on the share of that project's cost to the total costs of all
projects included in the authorizing legislation deleted text end new text begin accordingly new text end .

(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). new text begin The political
subdivision must not commingle revenue from a tax for a project or projects approved by
the voters under this section with revenue from a local sales tax authorized under section
297A.9901 or any other law, ordinance, city charter, or other provision, including an
extension of or modification to the uses of a local sales tax for a different project.
new text end

(c) new text begin The political subdivision imposing the tax must notify the commissioner at least 90
days before the date the political subdivision anticipates that revenues raised from the tax
are sufficient to fund the projects approved by the voters under paragraph (a). The notification
applies to each authorization of a tax and each project approved by the voters under paragraph
(a), regardless of whether the legislature has authorized the tax notwithstanding the
requirements of paragraph (d). new text end The tax must terminate after the revenues raised are sufficient
to fund the projects approved by the voters under paragraph (a). new text begin The political subdivision
must notify the commissioner within 30 days of the date that sufficient revenues have been
raised to fund the projects approved by the voters under paragraph (a).
new text end

(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 begin (e) 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 end

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 (f) The total tax rate imposed by a political subdivision under this section or any other
law, ordinance, or city charter and section 297A.9901 must not exceed one-half of one
percent, except that this limit does not apply to taxes authorized under this section or any
other law, ordinance, or city charter before June 1, 2023. Upon expiration of a tax authorized
under this section or any other law, ordinance, or city charter, the limit in this paragraph
applies.
new text end

new text begin (g) If a county imposes a tax under section 297A.993, the total amount of tax imposed
by the county under paragraph (f) and section 297A.993 must not exceed one percent, except
that this limit does not apply to taxes authorized under this section or any other law,
ordinance, or city charter before June 1, 2023. Upon expiration of a tax authorized under
this section or any other law, ordinance, or city charter, the limit in this paragraph applies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

new text begin [297A.9901] SPECIFIED CAPITAL PROJECTS; LOCAL AUTHORIZATION
ALLOWED; REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Associated bonding costs" means the cost of issuing bonds to finance a specified
capital project including but not limited to the costs of issuance of the bonds, capitalized
interest, and the payment of principal and interest on the bonds.
new text end

new text begin (c) "Contributor" has the meaning given in section 297A.9903, subdivision 1, paragraph
(f).
new text end

new text begin (d) "Convention center" means a structure:
new text end

new text begin (1) that has a minimum of 50,000 square feet for exhibit and meeting spaces;
new text end

new text begin (2) the square footage of which is expressly designed and constructed for the purposes
of presenting conventions, public meetings, and exhibitions, and includes parking facilities
that serve the center; and
new text end

new text begin (3) if located outside the metropolitan area, is more than 15 miles from the nearest
existing convention center.
new text end

new text begin (e) "Correctional facility" means a public facility licensed and inspected by the
commissioner of corrections, established and operated for the detention and confinement
of adults or juveniles, including but not limited to programs or facilities operating under
chapter 401, secure juvenile detention facilities, municipal holding facilities, juvenile
temporary holdover facilities, regional or local jails, lockups, work houses, work farms, and
detention facilities.
new text end

new text begin (f) "District court" means one of the ten judicial district courts in the state of Minnesota
subject to chapter 484.
new text end

new text begin (g) "Law enforcement center" means a facility that serves multiple communities and
provides public safety functions, including a fire or police station and a facility that provides
emergency 911 and dispatch functions, training facilities, court security and support,
emergency operations, evidence and record retention, and other public safety services.
new text end

new text begin (h) "Library" means a library that is part of a regional public library system as designated
by the regional library board under section 134.20, excluding a library located within a
metropolitan county.
new text end

new text begin (i) "Metropolitan county" has the meaning given in section 473.121, subdivision 4.
new text end

new text begin (j) "Park" means a park located entirely outside of a metropolitan county that meets the
criteria of regional significance under section 85.536, subdivision 6.
new text end

new text begin (k) "Political subdivision" means a county located in Minnesota or a statutory or home
rule charter city located in Minnesota.
new text end

new text begin (l) "Regional community center" means a structure that is expressly designed and
constructed for the purposes of recreational, cultural, educational, or public group activities,
or for civic engagement or social support, serving both residents and nonresidents of the
community.
new text end

new text begin (m) "Regional sports complex" means:
new text end

new text begin (1) a defined area of sports pavilions, stadiums, gymnasiums, swimming pools, or similar
facilities where regional tournaments may be hosted, and where members of the public
engage in physical exercise, participate in athletic competitions, witness sporting events,
and host regional tournaments; and
new text end

new text begin (2) which, if located outside the metropolitan area, is more than 15 miles from the nearest
existing regional sports complex.
new text end

new text begin (n) "Qualified recipient" has the meaning given in section 297A.9903, subdivision 1,
paragraph (l).
new text end

new text begin (o) "Specified capital project" means a convention center, correctional facility, district
court, law enforcement center, library, park, regional community center, regional sports
complex, or trail.
new text end

new text begin (p) "Trail" means:
new text end

new text begin (1) a trail of regional significance located entirely outside of a metropolitan county that
meets at least three of the criteria specified in items 1 to 5 in the Department of Natural
Resources Parks and Trails Legacy Plan dated February 14, 2011, required by Laws 2009,
chapter 172, article 3, section 2, paragraph (e); or
new text end

new text begin (2) a nonstate designated regional or state trail that provides at least an hour of outdoor
recreation opportunity or connects to other facilities that can provide at least an hour of
recreation in total:
new text end

new text begin (i) for which the trail or trail extension connects to regional defined assets including a
regionally designated park or higher education institution;
new text end

new text begin (ii) is included in a regional or community trail system plan; or
new text end

new text begin (iii) connects spaces of 25 acres to other trails or commercial areas.
new text end

new text begin Subd. 2. new text end

new text begin Policy; requirements. new text end

new text begin It is the public policy of the state of Minnesota that local
sales taxes are to be used instead of traditional local revenues only for construction and
rehabilitation of capital projects when a clear regional benefit beyond the taxing jurisdiction
can be demonstrated. Capital projects funded by local sales taxes must serve a regional
population, provide economic development benefits and opportunities, or draw individuals
to the region. If charged, access fees for the use of capital projects funded by a local sales
tax must be equal for residents and nonresidents of the taxing jurisdiction.
new text end

new text begin Subd. 3. new text end

new text begin Local authorization allowed. new text end

new text begin Notwithstanding section 477A.016, or any other
law or ordinance, a political subdivision may impose, extend, or modify the uses of a local
sales tax to finance a specified capital project without legislative authorization by
demonstrating the regional significance of each specified capital project as provided in
subdivisions 4 to 6. The authorization under this section applies to an extension to or
modification of a local sales tax authorized under special law or the requirements of section
297A.99.
new text end

new text begin Subd. 4. new text end

new text begin Regional community centers; regional sports complexes. new text end

new text begin To impose a local
sales tax to fund construction or remodeling of or improvements to a regional community
center or regional sports complex, a political subdivision must:
new text end

new text begin (1) demonstrate that the regional community center meets the requirements of subdivision
1, paragraph (l); or
new text end

new text begin (2) demonstrate that the regional sports complex meets the requirements of subdivision
1, paragraph (m); and
new text end

new text begin (3) conduct and present an analysis of the surrounding region to demonstrate that there
is no similar facility open to nonresidents at the same cost as to residents.
new text end

new text begin Subd. 5. new text end

new text begin Criminal justice facilities. new text end

new text begin (a) To impose a local sales tax to fund construction
or remodeling of or improvements to a correctional facility, a political subdivision must
demonstrate the need for the facility by providing:
new text end

new text begin (1) official documentation of the age of the facility; and
new text end

new text begin (2)(i) official correspondence from the Department of Corrections that includes an
analysis of the facility and description of the improvements or updates needed; or
new text end

new text begin (ii) if the facility is a joint project between two or more counties, the joint powers
agreement or other official documentation between at least one other county demonstrating
that the facility will serve public safety functions for the region.
new text end

new text begin (b) To impose a local sales tax to fund construction or remodeling of or improvements
to a district court office, a political subdivision must demonstrate the need for the facility
by providing the age of the facility and a description of improvements needed.
new text end

new text begin (c) To impose a local sales tax to fund construction or remodeling of or improvements
to a law enforcement center, a political subdivision must provide resolutions from
surrounding counties, statutory or home rule charter cities, or townships affirming that the
functions of the law enforcement center will meet the needs of the surrounding county,
statutory or home rule charter city, or township.
new text end

new text begin Subd. 6. new text end

new text begin Convention centers; parks and trails. new text end

new text begin (a) To impose a local sales tax to finance
construction or remodeling of or improvements to a convention center, a political subdivision
must demonstrate that the convention center meets the requirements of subdivision 1,
paragraph (d).
new text end

new text begin (b) To impose a local sales tax to finance construction of or improvements to a park, a
political subdivision must demonstrate how the project meets the criteria described in
subdivision 1, paragraph (j).
new text end

new text begin (c) To impose a local sales tax to finance construction of or improvements to a trail, a
political subdivision must demonstrate how the project meets the criteria described in
subdivision 1, paragraph (p).
new text end

new text begin Subd. 7. new text end

new text begin Demonstration of regional benefit; public hearing. new text end

new text begin (a) A political subdivision
seeking to impose a local sales tax must conduct a public hearing to provide information
regarding each specified capital project the political subdivision proposes to fund with the
local sales tax. Notice of the hearing must be provided at least 30 days in advance of the
hearing and must include:
new text end

new text begin (1) the tax rate;
new text end

new text begin (2) a description of each project proposed to be funded by the local sales tax; and
new text end

new text begin (3) the amount of tax revenue that would be used for each project and the estimated time
needed to raise that amount of revenue.
new text end

new text begin (b) The public must be allowed to speak at the hearing required under paragraph (a).
The hearing must not be held before 6:00 p.m. The political subdivision must provide a
website address and a telephone number for the political subdivision that members of the
public may call if they have questions related to the notice and an address where comments
will be received by mail, except that no notice required under this paragraph shall be
interpreted as requiring the printing of a personal telephone number or address as the contact
information for a political subdivision. If a political subdivision does not maintain a website
or public offices where telephone calls can be received by the political subdivision, the
notice of the hearing required under paragraph (a) must indicate that the political subdivision
does not maintain a website or public offices where telephone calls can be received by the
political subdivision.
new text end

new text begin (c) Political subdivisions are encouraged to obtain demonstrations of support, including
letters, resolutions, or other official documentation, of each specified capital project to be
funded with revenue from a local sales tax from adjacent political subdivisions and townships.
For purposes of this paragraph, a county in which a statutory or home rule charter city or a
township is located and a statutory or home rule charter city or township located within a
county qualifies as "adjacent."
new text end

new text begin Subd. 8. new text end

new text begin Resolution required. new text end

new text begin (a) After conducting the public hearing required under
subdivision 7, paragraphs (a) and (b), and before the governing body of a political subdivision
seeks voter approval to impose a local sales tax, the governing body shall adopt a resolution
indicating its approval of the tax. The resolution must include:
new text end

new text begin (1) the proposed tax rate;
new text end

new text begin (2) a detailed description of no more than three projects to be funded with revenue from
the tax;
new text end

new text begin (3) documentation of the regional significance of each project, including:
new text end

new text begin (i) the share of the economic benefit to or use of each project by persons residing or
businesses located outside of the jurisdiction;
new text end

new text begin (ii) demonstration that the project meets the requirements of the applicable definitions
in subdivision 1; and
new text end

new text begin (iii) if applicable, demonstration of support as described in subdivision 7, paragraph (c);
new text end

new text begin (4) the amount of local sales tax revenue that would be used for each project and the
estimated time needed to raise that amount of revenue, inclusive of, if applicable, the
contribution share to qualified recipients; and
new text end

new text begin (5) the total revenue that will be raised for all projects before the tax expires and the
estimated length of time that the tax will be in effect if all proposed projects are funded.
new text end

new text begin (b) The jurisdiction seeking authority to impose a local sales tax by special law must
submit the resolution and the documentation required under paragraph (a) to the
commissioner pursuant to section 297A.9902.
new text end

new text begin Subd. 9. new text end

new text begin Voter approval required. new text end

new text begin (a) Imposition of a local sales tax under this section
is subject to approval by voters of the political subdivision at a general or special election.
The election must be held within two years of the date the political subdivision receives
approval from the commissioner under section 297A.9902 or the date the political subdivision
receives legislative authorization under special law. A political subdivision may choose to
conduct the election at a general or special election held on the first Tuesday after the first
Monday in November. 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 may not be funded
with the local sales tax revenue. For purposes of this section, "general election" and "special
election" have the meanings given in section 200.02, except that a general election or special
election held under this section must be held on the first Tuesday after the first Monday in
November.
new text end

new text begin (b) Each ballot question presented to voters must include:
new text end

new text begin (1) a description of each specified capital project, including acknowledgment of any
state mandate for a government service that necessitates the construction of the project, if
applicable;
new text end

new text begin (2) acknowledgment that the political subdivision is seeking authorization from voters
to impose the sales tax;
new text end

new text begin (3) the total cost of each capital project;
new text end

new text begin (4) the start date of the project and total project cost that may be generated for a period
lasting no longer than 30 years;
new text end

new text begin (5) the tax rate;
new text end

new text begin (6) acknowledgment that the total project cost may increase by up to ....... percent and
the duration of imposition of the tax may increase by up to ....... years;
new text end

new text begin (7) a statement that by voting "yes" the voter is voting for the tax at the rate specified
in clause (5) to:
new text end

new text begin (i) impose a new local sales tax;
new text end

new text begin (ii) increase a local sales tax; or
new text end

new text begin (iii) extend a local sales tax that would otherwise expire.
new text end

new text begin (c) The ballot language must not contain any statement that informs voters that by voting
"no" the voter acknowledges that the project subject to approval in the question may be
funded by increased property taxes.
new text end

new text begin Subd. 10. new text end

new text begin Administration; termination. new text end

new text begin (a) The proceeds of the tax must be dedicated
exclusively to payment of the construction and rehabilitation costs and associated bonding
costs related to the specified capital projects approved by the voters under subdivision 9,
paragraph (a), and, if applicable, contribution share issued to a political subdivision that is
a contributor for which no qualified recipient exists equalization distributions. The political
subdivision must not commingle revenue from a tax approved by the voters under this
section with revenue from a local sales tax authorized under section 297A.99 or any other
law, ordinance, city charter, or other provision, including an extension of or modification
to the uses of a local sales tax for a different project.
new text end

new text begin (b) The political subdivision imposing the tax must notify the commissioner at least 90
days before the date the political subdivision anticipates that revenues raised from the tax
are sufficient to fund the projects approved by the voters under subdivision 9, paragraph
(a). The notification applies to each authorization of a tax and each project approved by the
voters under subdivision 9, paragraph (a), regardless of whether the legislature has authorized
the tax notwithstanding the requirements of paragraph (c). The tax must terminate after the
revenues raised are sufficient to fund the projects approved by the voters under subdivision
9, paragraph (a). The political subdivision must notify the commissioner within 30 days of
the date that sufficient revenues have been raised to fund the projects approved by the voters
under subdivision 9, paragraph (a).
new text end

new text begin (c) 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.
new text end

new text begin (d) If a tax is terminated because sufficient revenues have been raised, any amount of
tax collected 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 Subd. 11. new text end

new text begin Other provisions apply. new text end

new text begin (a) The provisions of section 297A.99, subdivisions
1, paragraph (d), and 4 to 13, apply to taxes authorized under this subdivision.
new text end

new text begin (b) All contracts for construction of specified capital projects under this section that are
located in a metropolitan county are subject to the requirement to pay the prevailing wage
rate, as defined in section 177.42, subdivision 6, and to the requirements and enforcement
provisions of sections 177.27, 177.30, 177.32, 177.41 to 177.435, 177.44, and 177.45. For
purposes of complying with sections 177.30, paragraph (a), clauses (6) and (7), and 177.41
to 177.435, the political subdivision imposing the tax is the contracting authority and
contracting agency and the project is considered a public works project.
new text end

new text begin (c) The total tax rate imposed by a political subdivision under this section and section
297A.99 must not exceed one-half of one percent.
new text end

new text begin (d) If a county imposes a tax under section 297A.993, the total amount of tax imposed
by the county under paragraph (c) and section 297A.993 must not exceed one percent.
new text end

new text begin (e) The maximum collection period for a tax imposed under this section is the earlier of
the amount of time necessary to collect the revenue equal to the cost of the specified capital
projects approved by the voters, including as associated bonding costs, or 30 years.
new text end

new text begin Subd. 12. new text end

new text begin Bonds; authorization. new text end

new text begin (a) A political subdivision may issue bonds under
chapter 475 to finance all or a portion of the costs of a specified capital project. The aggregate
principal amount of bonds issued must not exceed the cost of a qualifying capital project
approved by the voters, plus associated bonding costs. The bonds may be paid from or
secured by any funds available to the political subdivision, including the tax authorized
under this section and approved by the voters. The issuance of bonds under this subdivision
is not subject to sections 275.60 and 275.61.
new text end

new text begin (b) A separate election to approve the bonds under section 475.58 is not required.
new text end

new text begin Subd. 13. new text end

new text begin Filing and imposition requirements. new text end

new text begin (a) A political subdivision that has
received approval to impose a tax from the commissioner under this section must file a
certificate of local approval with the secretary of state within 60 days after receiving voter
approval for the tax to be lawfully imposed. If the tax is approved by the voters, the political
subdivision must impose the tax within 15 months of receiving the voter approval. If the
tax is not imposed within 15 months, the authority to impose the tax under this section
expires.
new text end

new text begin (b) If, after receiving voter approval, a political subdivision cancels a project approved
by the voters, the political subdivision must notify the commissioner. The commissioner
must proportionately decrease the maximum amount of tax revenue the political subdivision
may collect. If the political subdivision has already collected revenue for the canceled
project, the political subdivision must return the funds to the commissioner for deposit to
the general fund. The political subdivision must use any other source of revenue available
to pay any outstanding debt on the bonds that were issued for the canceled project.
new text end

new text begin Subd. 14. new text end

new text begin Allowance for inflation. new text end

new text begin (a) Before the expiration of the 15-month period
under subdivision 13, paragraph (a), a political subdivision may increase the amount approved
by the voters to finance the specified capital project or the amount of time the tax may be
imposed as approved by the voters to collect revenues sufficient to fund the specified capital
project, or both.
new text end

new text begin (b) The total cost of the specified project as approved by the voters under subdivision
9, paragraph (b), clause (3), may be increased by the greater of:
new text end

new text begin (1) .......; or
new text end

new text begin (2) ....... plus the rate of change in inflation according to the Producer Price Index for
New Nonresidential Building Construction published by the Bureau of Labor Statistics for
the period beginning ....... and ending ........
new text end

new text begin (c) A political subdivision exercising the options under paragraphs (a) and (b) must
adopt a resolution documenting the need for the increase in project cost or duration of
imposition of the tax, or both. The political subdivision must file the resolution with the
commissioner and the ....... within ....... days of adopting the resolution, but not after the
15-month period under subdivision 13, paragraph (a), has expired.
new text end

new text begin Subd. 15. new text end

new text begin Collection and retention. new text end

new text begin (a) The commissioner shall remit the proceeds of
the tax, less refunds and a proportionate share described in clauses (1) and (2), at least
quarterly, to the political subdivision. The commissioner shall deduct from the proceeds
distributed to a political subdivision an amount that equals:
new text end

new text begin (1) not more than one percent for the direct and indirect costs of the department to
administer, audit, and collect the tax, of which a portion must be used for the cost of
constructing and maintaining a zip code or geocode database necessary for local sales tax
collections under the Streamlined Sales and Use Tax Agreement in section 297A.995; and
new text end

new text begin (2) the political subdivision's contribution share of the amount to be paid under section
297A.9903, pursuant to the requirements of subdivision 16.
new text end

new text begin (b) The revenue under paragraph (a), clause (1), must be deposited into the Revenue
Department service and recovery special revenue fund established under section 270C.15.
new text end

new text begin (c) The revenue retained under paragraph (a), clause (2), must be deposited into the local
sales tax equalization distribution account.
new text end

new text begin Subd. 16. new text end

new text begin Contribution share. new text end

new text begin The amount of tax that the commissioner must retain
under subdivision 15, paragraph (a), clause (2), is equal to:
new text end

new text begin (1) five percent for a political subdivision whose tax is authorized and imposed under
this section;
new text end

new text begin (2) five percent for a political subdivision that amends, extends, or otherwise modifies
a tax that was authorized and imposed by special law before July 1, 2025; or
new text end

new text begin (3) eight percent for a political subdivision that is authorized by special law to impose
a new tax after June 30, 2025.
new text end

new text begin Subd. 17. new text end

new text begin Accounts established; transfer. new text end

new text begin The local sales tax equalization distribution
account is established in the special revenue fund. Funds in the account must be distributed
in accordance with section 297A.9903.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

new text begin [297A.9902] LOCAL SALES TAXES; OVERSIGHT.
new text end

new text begin (a) A political subdivision seeking to impose a local sales tax under the provisions of
section 297A.9901 must file a copy of the resolution and documentation required under
section 297A.9901, subdivision 8, paragraph (a), clause (3), with the commissioner by
October 31 of the first year before the political subdivision seeks voter approval of the tax.
new text end

new text begin (b) The commissioner must verify whether a project included in the submission under
paragraph (a) meets the requirements of section 297A.9901, subdivisions 1 and 4 to 8. By
January 10 of the first year in which the political subdivision must seek voter approval of
a local sales tax authorized under section 297A.9901, subdivision 9, paragraph (a), the
commissioner must notify the political subdivision of the commissioner's determination.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

new text begin [297A.9903] LOCAL SALES TAX EQUALIZATION DISTRIBUTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "City" means a statutory or home rule charter city.
new text end

new text begin (c) "City sharing pool" means a city or cities that are qualified recipients of a distribution
from the same contributor's contribution share. For a contributor that is a city located in a
metropolitan county, the city sharing pool consists of cities that are qualified recipients and
are contiguous to the contributor. For a contributor that is a city located outside of a
metropolitan county, the city sharing pool consists of cities that are qualified recipients and
are located in the same county as the contributor.
new text end

new text begin (d) "Commissioner" means commissioner of revenue.
new text end

new text begin (e) "Contribution share" means the percentage of the total local sales taxes that were
collected by a political subdivision in the previous calendar year pursuant to section
297A.9901, subdivision 16.
new text end

new text begin (f) "Contributor" means a political subdivision that:
new text end

new text begin (1) authorizes and imposes a local sales tax under section 297A.9901;
new text end

new text begin (2) amends, extends, or otherwise modifies a tax that was authorized before July 1, 2025;
or
new text end

new text begin (3) is authorized by special law to impose a new tax after June 30, 2025.
new text end

new text begin (g) "County sharing pool" means a county or counties that are qualified recipients of a
distribution from the same contributor's contribution share. For a county that is a contributor,
the sharing pool consists of counties that are qualified recipients and are contiguous to the
contributor.
new text end

new text begin (h) "Local sales tax" means:
new text end

new text begin (1) a local sales tax imposed under section 297A.9901;
new text end

new text begin (2) a local sales tax imposed under section 297A.99; or
new text end

new text begin (3) a local sales tax imposed under special law.
new text end

new text begin (i) "Metropolitan county" has the meaning given in section 473.121, subdivision 4.
new text end

new text begin (j) "Political subdivision" has the meaning given in section 297A.9901, subdivision 1,
paragraph (j).
new text end

new text begin (k) "Population" means the population estimated or established, as of January 1 in the
year distributions under this section are calculated, by the most recent federal census; by a
special census conducted under contract with the United States Bureau of the Census; or
by a population estimate of the state demographer made pursuant to section 4A.02, whichever
is the most recent.
new text end

new text begin (l) "Qualified recipient" means a political subdivision that is qualified to receive a
distribution under this section and:
new text end

new text begin (1) does not meet the definition of contributor;
new text end

new text begin (2) did not impose a local sales tax in the prior calendar year; and
new text end

new text begin (3) is:
new text end

new text begin (i) a city that is:
new text end

new text begin (A) contiguous to a city located in a metropolitan county and included in the definition
of contributor in the prior calendar year; or
new text end

new text begin (B) located in a county outside of the metropolitan area where at least one city is included
in the definition of contributor in the prior calendar year; or
new text end

new text begin (ii) a county that is contiguous to a county that is included in the definition of contributor
in the prior calendar year.
new text end

new text begin Subd. 2. new text end

new text begin Contribution share. new text end

new text begin The commissioner must annually retain each contributor's
contribution share.
new text end

new text begin Subd. 3. new text end

new text begin Distribution share; requirements. new text end

new text begin (a) In order to receive a distribution share,
a qualified recipient must adopt a resolution supporting a proposed local sales tax
implemented by a contributor to the commissioner by October 31 of the year before the
contributor seeks voter approval of the tax.
new text end

new text begin (b) The commissioner must divide each contributor's contribution share among all
qualified recipients in the contributor's city sharing pool or county sharing pool, in proportion
to the population of the political subdivisions in the sharing pool. A qualified recipient's
distribution is the sum of the shares from all eligible sharing pools.
new text end

new text begin Subd. 4. new text end

new text begin Certification. new text end

new text begin The commissioner must annually calculate and certify each
political subdivision's contribution share and each qualified recipient's distribution based
on local sales taxes collected in the prior calendar year. If no qualified recipients exist for
a political subdivision that is a contributor, the contribution share retained under subdivision
2 shall be paid to that political subdivision, and those funds shall be subject to the
requirements under section 297A.9901, subdivision 10, paragraph (a). The commissioner
must provide notice of the certification to each political subdivision by January 31.
new text end

new text begin Subd. 5. new text end

new text begin Payment. new text end

new text begin By March 15 annually, the commissioner of revenue must pay to
each qualified recipient the distribution or contribution share certified under subdivision 4.
new text end

new text begin Subd. 6. new text end

new text begin Appropriation. new text end

new text begin The amount required to make distributions under this section
is appropriated from the local sales tax equalization distribution account established under
section 297A.9901, subdivision 17, to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, section 297A.99, subdivision 3a, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 25-01074

297A.99 LOCAL SALES TAXES.

Subd. 3a.

Temporary moratorium.

(a) Notwithstanding subdivisions 1, 2, and 3, until after May 31, 2025, a political subdivision may not engage in any of the following activities in connection with imposing a new local sales and use tax or modifying an existing local sales and use tax:

(1) any activity described in subdivision 1, paragraph (d);

(2) adopt a resolution; or

(3) seek voter approval.

(b) Paragraph (a) does not apply to new local sales and use taxes or modifications to existing local sales and use taxes authorized in May, 2023.

(c) This subdivision expires June 1, 2025.