SF 5424

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/19/2024 10:12am

A bill for an act
relating to taxation; local sales and use; modifying requirements for enacting local
sales and use taxes; amending Minnesota Statutes 2022, section 297A.99,
subdivision 3; Minnesota Statutes 2023 Supplement, section 297A.99, subdivision
1; proposing coding for new law in Minnesota Statutes, chapter 297A; repealing
Minnesota Statutes 2023 Supplement, section 297A.99, subdivision 3a.

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

Section 1.

Minnesota Statutes 2023 Supplement, 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, 2024.
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 2022, 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). 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 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 tax for a different project.
new text end

(c) new text begin The political subdivision imposing the tax must notify the commissioner and the
state auditor at least 60 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 and the state auditor 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.

(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 ....., the reporting requirements under section
297A.9902 apply to taxes authorized under special law or the requirements of section
297A.99.
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) The total tax rate imposed by a political subdivision under this section and section
297A.9901 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. If a local sales tax is imposed by a county,
the limit under this paragraph includes any tax authorized under section 297A.993.
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.

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 definitions
have the meanings given.
new text end

new text begin (b) "Airport" means an airport not subject to the governance of the metropolitan airports
commission organized under the provisions of sections 473.601 to 473.679.
new text end

new text begin (c) "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; and
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.
new text end

new text begin (d) "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 (e) "Law enforcement center" means a facility that serves multiple communities and
provides public safety functions, including a fire or police station and including 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 (f) "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 (g) "Metropolitan county" has the meaning given in section 473.121, subdivision 4.
new text end

new text begin (h) "Park" means a park of regional significance located entirely outside of a metropolitan
county that meets at least three of the criteria specified in items 1, 2, and 4 to 6 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).
new text end

new text begin (i) "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 (j) "Prevailing wage rate" has the meaning given in section 177.42, subdivision 6.
new text end

new text begin (k) "Regional community center" means a structure that has a minimum of 10,000 square
feet 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 (l) "Regional 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, witness sporting events, and host regional tournaments.
new text end

new text begin (m) "Specified capital project" means an airport, convention center, correctional facility,
law enforcement center, library, park, regional community center, regional sports complex,
or trail.
new text end

new text begin (n) "Trail" means 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).
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. 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.
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 7. 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 Demonstration of regional benefit; resolution required. 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 60 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, inclusive of the amount distributed under subdivision
6, paragraph (a), clause (3), if that option is selected.
new text end

new text begin (b) After conducting the public hearing required under paragraph (a) 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; and
new text end

new text begin (ii) demonstration that the project meets the requirements of the applicable definitions
in subdivision 1;
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; 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 (c) The jurisdiction seeking authority to impose a local sales tax by special law must
submit the resolution and the documentation required under paragraph (b) to the state auditor
pursuant to section 297A.9902.
new text end

new text begin Subd. 5. 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 submits the
documentation required under subdivision 4, paragraph (c). 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 and the termination date of the tax must be reduced
proportionately based on the share of that project's cost to the total cost of all projects
presented to voters in the general or special election. For purposes of this section, "general
election" and "special election" have the meanings 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 (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, inclusive of the amount required under
subdivision 6, paragraph (a), clause (3);
new text end

new text begin (4) the start date of the project and maximum 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) 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; and
new text end

new text begin (7) in combination with the statement required under clause (6), a statement 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 (c) 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 paragraph (a). The political subdivision 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 (d) The political subdivision imposing the tax must notify the commissioner and the
state auditor at least 60 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 (e). The tax must terminate after the revenues
raised are sufficient to fund the projects approved by the voters under paragraph (a). The
political subdivision must notify the commissioner and the state auditor 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

new text begin (e) 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 (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 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. 6. new text end

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

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

new text begin (1) conduct an analysis of the surrounding region to demonstrate that there is no similar
regional sports complex or regional community center open to nonresidents at the same
cost as to residents;
new text end

new text begin (2) obtain resolutions adopted by at least two surrounding counties, statutory or home
rule charter cities, or townships affirming there is a local or regional need for the regional
sports complex or regional community center; or
new text end

new text begin (3) develop and present a model for the sharing of local sales tax revenues with
surrounding counties, statutory or home rule charter cities, or townships for projects that
meet needs of the counties, statutory or home rule charter cities, or townships.
new text end

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

new text begin Subd. 7. 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. 8. new text end

new text begin Convention centers; airports; 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 (c).
new text end

new text begin (b) To impose a local sales tax to finance construction or remodeling of or improvements
to an airport, a political subdivision must demonstrate the regional necessity of the airport.
new text end

new text begin (c) 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 (h).
new text end

new text begin (d) 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 (n).
new text end

new text begin Subd. 9. 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 13, apply to taxes authorized under this subdivision.
new text end

new text begin (b) The prevailing wage rate applies to all contracts for construction of specified capital
projects under this section.
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 percent. If a local sales tax is imposed by a county, the limit
under this paragraph includes any tax authorized under section 297A.993.
new text end

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2024.
new text end

Sec. 4.

new text begin [297A.9902] LOCAL SALES TAXES; 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 the provisions of section 297A.9901 must file a copy of the resolution and
documentation required under section 297A.9901, subdivision 4, paragraph (b), with the
commissioner and the state auditor by November 30 of the year before the political
subdivision seeks voter approval of the tax.
new text end

new text begin (b) The state auditor must verify whether a project included in the submission under
paragraph (a) meets the requirements of section 297A.9901, subdivisions 1 to 8. By January
10 of the year the political subdivision seeks voter approval of a local sales tax authorized
under section 297A.9901, the state auditor must notify the political subdivision of the state
auditor's determination. If the state auditor 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 (a) The state auditor shall develop a uniform
system of accounting and financial reporting for political subdivisions imposing a local
sales and use tax under sections 297A.99 and 297A.9901. The system of accounting and
financial reporting shall, as nearly as possible:
new text end

new text begin (1) provide for full disclosure of the uses of local sales and use tax revenues;
new text end

new text begin (2) permit comparison and reconciliation with the political subdivision's accounts and
financial reports;
new text end

new text begin (3) permit auditing of the funds expended on behalf of a political subdivision, including
a single political subdivision that is part of a multi-jurisdictional project or that is funded
in part or wholly through a local sales and use tax from other jurisdictions or with other
public money; and
new text end

new text begin (4) be consistent with generally accepted accounting principles.
new text end

new text begin (b) The political subdivision must annually submit to the state auditor a financial report
in compliance with paragraph (a). Copies of the report must also be provided to the auditor
and governing body of the political subdivision. To the extent necessary to permit compliance
with the requirement of financial reporting, the political subdivision and any other appropriate
political subdivision or private entity must provide the necessary records or information to
the state auditor as provided by the system of accounting and financial reporting developed
pursuant to paragraph (a). The political subdivision must submit the annual report for a year
on or before ... of the ....
new text end

new text begin (c) The annual financial report must also include the following items: ...
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 5. new text begin APPROPRIATION.
new text end

new text begin (a) $....... is appropriated from the general fund in fiscal year 2025 to the state auditor
to implement the requirements of Minnesota Statutes, section 297A.9902.
new text end

new text begin (b) $....... is annually appropriated in fiscal year 2026 and each year thereafter to
implement the requirements of Minnesota Statutes, section 297A.9902.
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 REPEALER.
new text end

new text begin Minnesota Statutes 2023 Supplement, 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 July 1, 2024.
new text end

APPENDIX

Repealed Minnesota Statutes: 24-08201

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.