Senate Taxes Committee hears multiple sales-tax exemption requests for local construction projects; bills laid over for omnibus tax bill

The Minnesota Senate Taxes Committee on Feb. 20, 2025 heard nearly a dozen bills asking for refundable sales-tax exemptions for construction materials used on local public projects, from a permanent PFAS water-treatment plant in Woodbury to school renovation and new-build projects, county government centers, a regional exhibition center and an airport capital program. Most bills were laid over for consideration in the omnibus tax bill.

Committee members said the requests, which ask the state to appropriate refunds from the general fund, are intended to lower project costs for local taxpayers and to preserve planned project scopes that have been reduced because of inflation and supply-chain pressures.

The committee heard extended testimony on a handful of projects that committee members and witnesses described as among the most time-sensitive or costly. Senator Nicole Mitchell said Senate File 13 would exempt materials and supplies used in construction, reconstruction, upgrades, expansion, renovation and remodeling of Woodbury’s water treatment facility, water tower and associated pipelines; the bill would make those taxes collected and then refunded and directs an appropriation to the Department of Revenue. Mary Van Milligan, identified in the hearing as Woodbury’s public works director, said the city has built temporary treatment facilities to address PFAS contamination and is moving forward with a permanent treatment plant, a water tower and roughly 17 miles of pipeline. She said the city expects a funding gap of up to $35,000,000 after the 3M settlement fund is used. “Therefore, on behalf of the city of Woodbury, I humbly ask that you pass SF 13, which provides a refundable exemption for these construction materials,” Van Milligan said.

School districts also sought the exemption because construction management procurement practices can make material purchases ineligible for the ordinary school sales-tax exemption. Superintendent Jeremy Schmidt of Becker…