Two bills seek a statewide refund process for sales tax on construction materials used by tax‑exempt public projects

Representative Swazinski and Representative Norris presented similar bills (HF618 and HF1248) that would create a statewide, administrable mechanism to refund sales tax paid on construction materials for projects of tax‑exempt public entities (cities, counties, school districts, hospitals, libraries, etc.) where lump‑sum contracts make it impractical for the public entity to purchase and inspect every material item directly.

Swazinski said the problem arises when contractors buy materials as part of a lump‑sum contract; public entities cannot practically procure and inspect every item themselves and therefore often end up paying sales tax indirectly through contract pricing. “When the rubber hit the road… contractors purchasing 2x4s, concrete and other materials on behalf of those tax free entities, aren't able to capture that sales tax exemption,” he said.

Testimony in support came from school districts, the Minnesota Intercounty Association, and municipal officials. Valerie Doslin (school districts) and Jenny Max (city administrator, Nisswa, and past League of Minnesota Cities president) said rising material costs and an administratively cumbersome exemption process increase project costs and put pressure on local property taxpayers. Nathan Jessen (Minnesota Intercounty Association) described the bills as a practical, refund‑based alternative to dozens of one‑off legislative exemptions that have emerged over time.

Supporters said the bills would create a refund process through the Department of Revenue that is verifiable after purchase rather than requiring upfront exemptions that some local governments cannot administer. Speakers noted prior legislative efforts and bipartisan sponsorship history; committee members adopted the A1 amendment (where applicable) and laid both bills over for possible omnibus inclusion.