HF 3027

as introduced - 94th Legislature (2025 - 2026) Posted on 04/10/2025 04:25pm

A bill for an act
relating to taxation; local sales and use; authorizing cities and counties to impose
local sales taxes for certain projects; providing for oversight; requiring revenue
sharing; requiring a report; appropriating money; amending Minnesota Statutes
2024, section 297A.99, subdivisions 1, 3, by adding a subdivision; 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 deleted text begin ; scope deleted text end .

(a) A political subdivision of this state may impose
a general sales tax new text begin :
new text end

(1) new text begin under section 297A.9901;
new text end

new text begin (2) new text end under section 297A.9915 deleted text begin , (2) deleted text end new text begin ;
new text end

new text begin (3) new text end under section 297A.992 deleted text begin , (3) deleted text end new text begin ;
new text end

new text begin (4) new text end under section 297A.9925 deleted text begin , (4) deleted text end new text begin ;
new text end

new text begin (5) new text end under section 297A.993 deleted text begin , (5) deleted text end new text begin ;
new text end

new text begin (6) new text end if permitted by special law deleted text begin , deleted text end new text begin ; new text end or

deleted text begin (6) deleted text end new text begin (7) 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 deleted text begin , deleted text end new text begin ; new text end or

(2) enacted on or after June 2, 1997, new text begin and before July 1, 2025, new text end 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 the day following final enactment.
new text end

Sec. 2.

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

new text begin Subd. 2a. new text end

new text begin Scope. new text end

new text begin The provisions of this section only apply to a tax imposed and enacted
by special law. A political subdivision seeking to amend, extend, or otherwise change a tax
imposed and enacted before July 1, 2025, must do so pursuant to the requirements of section
297A.9901.
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. 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 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).

(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.

(e) deleted text begin 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 new text begin Beginning January 1, 2026, the annual financial reporting
requirements under section 297A.9902, subdivision 2, apply to taxes authorized under
special law or under this section.
new text end

(f) 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 (g) A political subdivision that receives special law authority to impose a tax must file
a certificate of local approval with the secretary of state in accordance with section 645.021,
subdivisions 2 and 3. If the tax is approved by the voters, the political subdivision must
impose the tax within 15 months of receiving voter approval. If the tax is not imposed within
15 months, the special law authority to impose the tax expires.
new text end

new text begin (h) Upon expiration of a tax authorized under this section or any other law, ordinance,
or city charter, the combined tax rate limit in section 297A.9901, subdivision 7, applies.
new text end

new text begin (i) 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 and must adjust the termination of the tax accordingly. If the political subdivision
has already collected revenue for the canceled project, the political subdivision must return
the money to the commissioner to be added to the local sales tax equalization account for
the political subdivision's contribution share in accordance with section 297A.9903. 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 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] LOCAL SALES TAXES; LOCAL AUTHORIZATION
ALLOWED.
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 costs of issuing bonds to finance a specified
capital project, including but not limited to the costs of issuing the bonds, capitalized interest,
and paying principal and interest on the bonds.
new text end

new text begin (c) "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, that serves residents and nonresidents of the community.
new text end

new text begin (d) "Convention center" means a structure that is expressly designed and constructed
for the purpose of presenting conventions, public meetings, and exhibitions, and that contains
at least 50,000 square feet for exhibit and meeting spaces and includes parking facilities
that serve the center.
new text end

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

new text begin (f) "General election" has the meaning given in section 200.02.
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. Law
enforcement center does not include correctional facilities licensed under section 241.021.
new text end

new text begin (h) "Library" means a library that is part of a regional public library system established
under section 134.20.
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 an area of regional significance that contains natural, seminatural, or
planted space set aside for public recreation and enjoyment or for the protection of wildlife
or natural habitats.
new text end

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

new text begin (l) "Special election" has the meaning given in section 200.02, except that a 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 (m) "Specified capital project" means a community center, convention center, district
court, law enforcement center, library, park, sports complex, or trail. A specified capital
project must serve a regional population, provide economic development benefits and
opportunities, or draw nonresident individuals to the region.
new text end

new text begin (n) "Sports complex" means 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,
attend sporting events, and host regional tournaments. Sports complex does not include
venues in which a professional sports team competing in Major League Baseball, Major
League Soccer, the National Basketball Association, the Women's National Basketball
Association, the National Football League, or the National Hockey League competes in
games, competitions, training, or practices.
new text end

new text begin (o) "Trail" means a path or track that passes through a natural area and that serves a
destination, provides recreational opportunities, and draws a regional population.
new text end

new text begin Subd. 2. 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 by: (1) meeting the requirements of this
section; (2) receiving approval from the commissioner; and (3) receiving voter approval.
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, or any other
law, ordinance, city charter, or other provision.
new text end

new text begin Subd. 3. new text end

new text begin Use of proceeds. new text end

new text begin The proceeds of a tax imposed under this section must be
dedicated exclusively to paying construction or rehabilitation costs, including associated
bonding costs, related to the specified capital projects approved by the voters. A political
subdivision may use the proceeds of a tax to fund not more than three specified capital
projects. Specified capital projects must meet the requirements in subdivisions 1 and 4 to
6. The political subdivision imposing the tax must not commingle revenue from a tax
approved by the voters under this section with revenue from a 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 tax for a different project.
new text end

new text begin Subd. 4. new text end

new text begin Sports complexes, community centers, and convention centers; additional
requirements. new text end

new text begin (a) To impose a tax to fund the construction or rehabilitation of a community
center, sports complex, or convention center, a political subdivision must:
new text end

new text begin (1) perform an analysis of the surrounding region that demonstrates there is no similar
sports complex, community center, or convention center open to nonresidents at the same
cost as residents within a 15-mile radius of the political subdivision for political subdivisions
located outside of a metropolitan county and within an eight-mile radius of the political
subdivision for political subdivisions located within a metropolitan county; and
new text end

new text begin (2) equally charge residents and nonresidents of the political subdivision imposing the
tax for the use of the facility, if members of the public are charged an admission or entry
fee for use of the facility.
new text end

new text begin (b) The political subdivision must submit documentation of the requirements of paragraph
(a) to the commissioner pursuant to the requirements of section 297A.9902, subdivision 1.
new text end

new text begin Subd. 5. new text end

new text begin District courts; law enforcement centers; additional requirements. new text end

new text begin (a) To
impose a tax to fund construction or rehabilitation 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 (b) To impose a tax to fund construction or rehabilitation of or improvements to a law
enforcement center, a political subdivision must provide resolutions from the governing
bodies of 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. The resolutions must be submitted
to the commissioner as part of the documentation filed under section 297A.9902, subdivision
1.
new text end

new text begin (c) The political subdivision must submit documentation of the requirements of
paragraphs (a) and (b) to the commissioner pursuant to the requirements of section
297A.9902, subdivision 1.
new text end

new text begin Subd. 6. new text end

new text begin Parks and trails; additional requirements. new text end

new text begin (a) To impose a tax to fund the
construction or rehabilitation of or improvements to a park, a political subdivision must
demonstrate that the park:
new text end

new text begin (1) provides a natural resource-based setting, outdoor recreation facilities, and multiple
activities that are primarily natural resource based;
new text end

new text begin (2) occupies at least 100 acres of land;
new text end

new text begin (3) is utilized by a regional population; and
new text end

new text begin (4) includes unique natural, historic, or cultural features or characteristics.
new text end

new text begin (b) To impose a tax to fund the construction or rehabilitation of or improvements to a
trail, a political subdivision must demonstrate that the trail:
new text end

new text begin (1) serves more than a local population and encompasses multiple jurisdictions; and
new text end

new text begin (2) connects to existing or planned state or regional parks or trails.
new text end

new text begin (c) The political subdivision must submit documentation of the requirements of
paragraphs (a) and (b) to the commissioner pursuant to the requirements of section
297A.9902, subdivision 1.
new text end

new text begin (d) In determining whether the proposed park or trail meets the criteria established in
paragraphs (a) and (b), the commissioner may consult examples and guidance contained in
the Department of Natural Resources Parks and Trails Legacy Plan dated February 14, 2011.
new text end

new text begin Subd. 7. new text end

new text begin Tax rate and duration. new text end

new text begin (a) The combined total tax rate imposed by a political
subdivision under this section and section 297A.99 must not exceed one-half of one percent.
If a local sales tax is imposed by a county, the limit under this paragraph excludes any tax
authorized under section 297A.993.
new text end

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

new text begin Subd. 8. 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 an amount to be applied to the payment of the costs of issuing
the bonds, including interest. 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. 9. new text end

new text begin Public hearing required. new text end

new text begin (a) Prior to seeking authority to impose a tax under
this section, a political subdivision must hold at least one public hearing that is open to
residents and nonresidents. The public hearing must allow equal time for proponents and
opponents to express their opinions on the imposition of the tax. The political subdivision
must provide at least 30 days' notice of the public hearing and must publish the notice on
the political subdivision's website. The notice must identify the time and location of the
hearing and contain the following information:
new text end

new text begin (1) the proposed 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 to be used for each project and the estimated time needed
to raise that amount of revenue, inclusive of the estimated amount distributed under
subdivision 17.
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 and a telephone number for the political subdivision that members of the public
may call with questions related to the notice and an address where comments will be received
by mail. The notice required under this subdivision does not require the printing of a personal
telephone number or mailing 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) The political subdivision must submit the minutes from this hearing to the
commissioner when requesting approval of the tax pursuant to the provisions of section
297A.9902, subdivision 1, paragraph (a).
new text end

new text begin Subd. 10. new text end

new text begin Resolution required. new text end

new text begin (a) After conducting the public hearing required under
subdivision 9 and before the governing body of a political subdivision seeks voter approval
to impose a local sales tax, the governing body must 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 that will be funded with revenue
from the tax;
new text end

new text begin (3) documentation of the regional significance of each specified capital 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; and
new text end

new text begin (ii) demonstration that the project meets the requirements of the applicable definitions
in subdivision 1, as well as the requirements of subdivisions 4 to 6;
new text end

new text begin (4) the amount of local sales tax revenue that will be used for each project and the
estimated time needed to raise that amount of revenue; 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 political subdivision must submit the resolution along with underlying
documentation to the commissioner pursuant to the provisions of section 297A.9902,
subdivision 1, paragraph (a).
new text end

new text begin Subd. 11. new text end

new text begin Community support required. new text end

new text begin Prior to seeking authority to impose a tax
under this section, a political subdivision must provide to the commissioner letters or
resolutions from the governing bodies of at least two surrounding local governments that
affirmatively acknowledge that there is a local or regional need for the proposed specified
capital project. Documentation must be submitted to the commissioner as required by section
297A.9902, subdivision 1, paragraph (a).
new text end

new text begin Subd. 12. new text end

new text begin Voter approval required. new text end

new text begin (a) A local sales tax approved by the commissioner
is subject to voter approval prior to being imposed. A referendum conducted under this
section must meet the following requirements:
new text end

new text begin (1) the referendum must be held on the first Tuesday after the first Monday in November
at a general or special election, so long as the ballot question for approval of the tax is not
the only item on the ballot, within the two-year period after the political subdivision has
received authority to impose the tax;
new text end

new text begin (2) the ballot language must contain the following information:
new text end

new text begin (i) a description of each specified capital project that will be funded by the tax;
new text end

new text begin (ii) the projected start date of the tax;
new text end

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

new text begin (iv) the cost of the project, including associated bonding costs;
new text end

new text begin (v) the maximum amount of time the tax will be imposed;
new text end

new text begin (vi) acknowledgment that the total project cost may increase by up to a certain percent
and the duration of imposition of the tax may increase by up to a number of years as the
allowance for inflation authorized under subdivision 18;
new text end

new text begin (vii) a statement that a portion of the tax revenue will be used for the political
subdivision's contributions according to the revenue sharing requirement in subdivision 17;
and
new text end

new text begin (viii) a statement that an affirmative vote means that a new tax will be imposed or that
an existing tax will be extended or increased;
new text end

new text begin (3) the ballot language must not contain any statement that informs the voter that by
voting "no" the voter acknowledges that the project subject to approval in the question may
be funded by increased property taxes; and
new text end

new text begin (4) each project must be a separate ballot question if a political subdivision is seeking
voter approval for more than one project.
new text end

new text begin (b) A project that is not approved by the voters may not be funded with the tax revenue
and the termination date of the tax approved by the commissioner must be reduced
proportionately based on the share of that project's cost to the total costs of all projects.
new text end

new text begin (c) A political subdivision may not advertise or expend money for the promotion of a
referendum to support imposing a tax and may only spend money related to:
new text end

new text begin (1) conducting the referendum;
new text end

new text begin (2) disseminating information regarding the projects to be funded with the tax;
new text end

new text begin (3) providing notice of and conducting public forums at which proponents and opponents
of the referendum are given equal time to express their opinions on the merits of the
referendum; and
new text end

new text begin (4) providing facts and data on the impact of the proposed local sales tax on consumer
purchases.
new text end

new text begin (d) The political subdivision must submit the language of each ballot question to the
commissioner for approval prior to printing the ballot for use in a referendum.
new text end

new text begin Subd. 13. new text end

new text begin Legislative approval required. new text end

new text begin (a) A political subdivision seeking to impose
a tax must obtain legislative approval to impose the tax if the tax does not meet the
requirements of this section or if the commissioner does not approve the proposal submitted
for imposition of the tax. The provisions of section 297A.99 apply to any tax imposed by
special law.
new text end

new text begin (b) In addition to the requirements imposed under section 297A.99, subdivision 2, the
political subdivision must include in its resolution submitted to the legislature:
new text end

new text begin (1) a detailed description of how the request does not meet the requirements of this
section; and
new text end

new text begin (2) letters or resolutions from the governing bodies of each local government located in
Minnesota that abuts the political subdivision that affirmatively acknowledge that there is
a local or regional need for the proposed capital project.
new text end

new text begin (c) A tax approved by the legislature is subject to the collection and retention provisions
of subdivision 17 and sections 297A.9902, subdivisions 2 and 3, and 297A.9903.
new text end

new text begin Subd. 14. new text end

new text begin Filing and imposition requirements. new text end

new text begin A political subdivision that receives
approval from the commissioner to impose a tax 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 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 Subd. 15. new text end

new text begin Administration; termination. new text end

new text begin (a) A political subdivision imposing a tax
under this section must not commingle revenue from a tax for a project or projects approved
by the voters under this section with revenue from a 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 tax for a different project.
new text end

new text begin (b) A political subdivision imposing a tax under this section 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 project or projects approved by the voters. The
notification applies to each authorization of a tax and each project approved by the voters,
regardless of whether the legislature has authorized the tax, notwithstanding the requirements
of section 297A.99, subdivision 3, paragraph (d).
new text end

new text begin (c) After a tax imposed under this section by a political subdivision has expired or been
terminated, the political subdivision is prohibited from imposing a new 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 (e) 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 and must adjust the termination of the tax accordingly. If the political subdivision
has already collected revenue for the canceled project, the political subdivision must return
the money to the commissioner to be added to the local sales tax equalization account for
the political subdivision's contribution share in accordance with subdivision 17 and section
297A.9903. 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. 16. new text end

new text begin Collection and retention. new text end

new text begin The commissioner must 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 must deduct from the proceeds distributed
to a political subdivision an amount that equals:
new text end

new text begin (1) 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 to be deposited into the
Revenue Department service and recovery special revenue fund established under section
270C.15; and
new text end

new text begin (2) the political subdivision's contribution share of the amount to be paid under
subdivision 17 and section 297A.9903 to be deposited into the local sales tax equalization
distribution account.
new text end

new text begin Subd. 17. new text end

new text begin Revenue sharing required. new text end

new text begin A political subdivision imposing a tax under this
section is subject to the revenue sharing requirements of section 297A.9903. The amount
of tax that the commissioner must retain under subdivision 16, clause (2), is equal to:
new text end

new text begin (1) 15 percent for a political subdivision whose tax is authorized and imposed under this
section;
new text end

new text begin (2) 15 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) 20 percent for a political subdivision that is authorized by special law to impose a
new tax after July 1, 2025.
new text end

new text begin Subd. 18. 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 14, a political subdivision may increase the amount approved by the
voters to finance the specified capital project or increase 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 may be increased
by the greater of:
new text end

new text begin (1) ten percent; or
new text end

new text begin (2) ten percent 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 the month and calendar year in which the political subdivision
submits documentation to the commissioner under section 297A.9902, subdivision 1,
paragraph (a), and ending the month and calendar year in which the tax is approved by
voters under subdivision 12.
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 within ten days of adopting the resolution, but not after the 15-month period
under subdivision 14 has expired. A political subdivision may not extend the duration of
the tax beyond 30 years.
new text end

new text begin Subd. 19. new text end

new text begin Account established. new text end

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

new text begin Subd. 20. new text end

new text begin Other provisions apply. new text end

new text begin (a) The provisions of section 297A.99, subdivisions
4 to 10 and 12 to 13, apply to taxes authorized under this section.
new text end

new text begin (b) The requirements of section 475.53 apply to bonds issued for projects under this
section.
new text end

new text begin (c) All contracts for construction of specified capital projects under this section are
subject 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 section 177.30,
paragraph (a), clauses (6) and (7), and sections 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 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; VERIFICATION AND OVERSIGHT.
new text end

new text begin Subdivision 1. new text end

new text begin Filing requirement. new text end

new text begin (a) A political subdivision seeking to impose a local
sales tax under section 297A.9901 must file a copy of all documentation required under
section 297A.9901 with the commissioner. A political subdivision may file documentation
at any point during the year, but only documentation filed by October 31 is required to
receive a determination from the commissioner by January 10 of the following year.
new text end

new text begin (b) The commissioner must verify whether each project included in the submission under
paragraph (a) meets the requirements of section 297A.9901. The commissioner must notify
the political subdivision of the commissioner's determination within 60 days of receiving
the submission under paragraph (a). Any political subdivision that files its submission by
October 31 must receive the commissioner's determination by January 10 of the following
year. If the commissioner determines that a project does not meet the requirements of section
297A.9901, the political subdivision may seek legislative authorization for a local sales tax
to finance the project under the provisions of section 297A.99.
new text end

new text begin Subd. 2. new text end

new text begin Annual financial reporting. new text end

new text begin By January 31 of each odd-numbered year, a
political subdivision imposing a local sales tax pursuant to section 297A.99 or 297A.9901,
under special law, or by city charter or ordinance must submit information regarding the
uses of the local sales tax to the commissioner. The information must be submitted in the
form and manner prescribed by the commissioner. The commissioner or the commissioner's
designees may examine records of a political subdivision to complete or verify the provided
information.
new text end

new text begin Subd. 3. new text end

new text begin Enforcement. new text end

new text begin The commissioner must notify the governing body of the political
subdivision if the commissioner determines a political subdivision has not provided the
information required by subdivision 2; is not in compliance with the required use of proceeds
of the local sales tax as provided by section 297A.9901, subdivision 3, as approved by the
voters; or is not in compliance with any use of proceeds requirements as required by a
special law as approved by the voters. The governing body of the political subdivision must
respond in writing to the commissioner within 60 days after receiving the notification. The
written response must state whether the political subdivision accepts in whole or in part the
commissioner's findings. If the political subdivision does not accept the findings, the
statement must indicate the basis for disagreement. If the political subdivision does not take
corrective measures within 60 days of receipt of notice of noncompliance, the commissioner
must expire the tax.
new text end

new text begin Subd. 4. new text end

new text begin Report. new text end

new text begin By February 15 each year, the commissioner must submit a report to
the chairs and ranking minority members of the legislative committees with jurisdiction
over taxes summarizing the information provided by political subdivisions in the preceding
year under subdivision 2.
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) "Adjusted net tax capacity" means the qualified recipient's adjusted net tax capacity
under section 273.1325.
new text end

new text begin (c) "Average fiscal capacity" means the sum of the adjusted net tax capacities of all
qualified recipients in a city sharing pool or county sharing pool, divided by the population
of all cities in the city sharing pool or all counties in the county sharing pool.
new text end

new text begin (d) "City sharing pool" means all cities located within the same economic development
region. For purposes of this section, when a city is located within more than one economic
development region it is deemed to be located in the economic development region with
the highest share of the city's adjusted net tax capacity.
new text end

new text begin (e) "Contribution share" means the percentage of the total local sales taxes that were
retained pursuant to section 297A.9901, subdivision 17.
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 local sales 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 local sales tax after June 30, 2025.
new text end

new text begin (g) "County sharing pool" means all counties located within the same economic
development region.
new text end

new text begin (h) "Distribution index" means, for a qualified recipient, the product of: (1) its population;
and (2) the proportion that the average fiscal capacity in the preceding year bears to the
fiscal capacity of the qualified recipient for the preceding year.
new text end

new text begin (i) "Distribution share" for a qualified recipient means the product of:
new text end

new text begin (1) the contributor's contribution share available for distribution under subdivision 4 to
a city sharing pool or county sharing pool; and
new text end

new text begin (2) the proportion that the distribution index for the qualified recipient bears to the sum
of the distribution indices of all qualified recipients in the city sharing pool or county sharing
pool.
new text end

new text begin (j) "Economic development region" means the regions defined in section 462.385,
subdivision 1.
new text end

new text begin (k) "Fiscal capacity" of a qualified recipient means its adjusted net tax capacity divided
by its population.
new text end

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

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

new text begin (2) a local sales tax imposed under section 297A.99 or special law that was enacted or
modified after June 30, 2025.
new text end

new text begin (m) "Political subdivision" means a political subdivision as defined in section 297A.9901,
subdivision 1.
new text end

new text begin (n) "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 (o) "Qualified recipient" means a political subdivision that:
new text end

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

new text begin (2) did not collect a local sales tax in the prior calendar year that was approved by voters
prior to July 1, 2025; and
new text end

new text begin (3) is:
new text end

new text begin (i) a city that is located in the same economic development region as a city included in
the definition of a contributor in the prior calendar year; or
new text end

new text begin (ii) a county that is located in the same economic development region as a county included
in the definition of a contributor in the prior calendar year.
new text end

new text begin Subd. 2. new text end

new text begin Local sales tax revenue sharing required. new text end

new text begin A political subdivision with a local
sales tax is subject to the contribution requirements under subdivision 3 for any calendar
year, or portion thereof, in which a local sales tax is collected. All qualified recipients are
eligible for distributions under this section, and the commissioner must annually calculate
each qualified recipient's distribution share.
new text end

new text begin Subd. 3. new text end

new text begin Contribution share. new text end

new text begin Pursuant to section 297A.9901, subdivision 17, the
commissioner must annually retain each political subdivision's contribution share. For any
calendar year in which a political subdivision does not collect a local sales tax, the political
subdivision's contribution share is $0.
new text end

new text begin Subd. 4. new text end

new text begin Final distribution. new text end

new text begin The commissioner must divide each contributor's
contribution share among all qualified recipients in the contributor's city sharing pool or
county sharing pool according to each qualified recipient's distribution share. If a city sharing
pool or county sharing pool has no qualified recipients, then the contribution share for that
sharing pool must be divided among all other city sharing pools and county sharing pools,
in proportion to the contribution share available in each.
new text end

new text begin Subd. 5. new text end

new text begin Certification and settlement. new text end

new text begin The commissioner must annually calculate and
certify each contributor's contribution share and each qualified recipient's final distribution,
based on local sales taxes collected in the prior calendar year. The commissioner must
provide notice of the certification to each contributor and qualified recipient by January 31.
By March 15 annually, the commissioner must pay to each qualified recipient the distribution
share certified under this subdivision.
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 19, to the commissioner.
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: 25-04981

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.