HF 2663

as introduced - 90th Legislature (2017 - 2018) Posted on 05/12/2017 08:55am

A bill for an act
relating to taxation; sales and use; allowing cities to impose a local sales tax if
certain criteria are met; amending Minnesota Statutes 2016, 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 2016, 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 new text begin :
new text end

(1) under section 297A.992 deleted text begin , deleted text end new text begin ;
new text end

(2) under section 297A.993 deleted 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 law deleted 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 subdivision.
The provisions of this section preempt the provisions of any special law:

(1) enacted before June 2, 1997, 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 or a special
excise tax on motor vehicles.

(d) A political subdivision may not advertise or expend funds for the promotion of a
referendum to support imposing a local option sales tax.

(e) Notwithstanding paragraph (d), a political subdivision may expend funds to:

(1) conduct the referendum;

(2) disseminate information included in the resolution adopted under subdivision 2;

(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 sales tax on consumer purchases;
and

(5) provide facts and data related to the programs and projects to be funded with the
sales tax.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297A.99, subdivision 3, is amended to read:

Subd. 3.

Requirements for adoption, use, termination.

(a) Imposition of a local sales
tax is subject to approval by voters of the political subdivision at a general election. new text begin If the
local sales tax does not meet the requirements for imposition under section 297A.9935, new text end the
election must be conducted before the governing body of the political subdivision requests
legislative approval of the tax.

(b) The proceeds of the tax must be dedicated exclusively to payment of the cost of a
specific capital improvement which is designated at least 90 days before the referendum on
imposition of the tax is conducted.

(c) The tax must terminate after the improvement designated under paragraph (b) has
been completed.

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. Notwithstanding subdivision 13, this paragraph applies to all local sales taxes in effect
at the time of or imposed after May 26, 1999.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 3.

new text begin [297A.9935] SALES AND USE TAX; GENERAL 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 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. 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 3 to 12, are met.
new text end

new text begin Subd. 2. new text end

new text begin Allowed uses of revenue. new text end

new text begin 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 collecting and administering the tax; to pay all or part of the capital costs
of the development, acquisition, construction, expansion, and improvement; and to secure
and pay debt service on bonds or other obligations issued to finance capital costs of a regional
project, including the following:
new text end

new text begin (1) convention or civic center;
new text end

new text begin (2) public libraries;
new text end

new text begin (3) parks, trails, and recreational centers;
new text end

new text begin (4) overpasses, arterial and collector roads, and bridges, on, adjacent to, or connecting
to a Minnesota state highway;
new text end

new text begin (5) flood control and protection;
new text end

new text begin (6) water quality projects to address groundwater and drinking water pollution problems;
new text end

new text begin (7) court facilities;
new text end

new text begin (8) fire, law enforcement, and public safety facilities; and
new text end

new text begin (9) municipal buildings.
new text end

new text begin Subd. 3. 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 a general election.
new text end

new text begin (b) 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 that shows that
the specific project or projects to be funded by the tax meet the requirements of subdivision
2; the date on which the referendum will be held; 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 the maximum time that the tax may be imposed. 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 (c) The question put to the voters at the referendum authorizing the vote must include
information on the specific project or projects to be funded by the proceeds of the tax; 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 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. 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. 4. 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 must not be
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 must not be subject to
any levy limitations or be included in computing or applying any levy limitation to the city.
new text end

new text begin Subd. 5. new text end

new text begin Expiration; new authorization. new text end

new text begin The tax, if enacted, 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 must expire no later than 20 years after imposition from 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. A city
must not impose a new local option sales and use tax under this section while a previously
authorized one is still imposed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 4.

Minnesota Statutes 2016, 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 or deleted 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, 2017.
new text end