Committee adopts amendment and lays over bill giving cities authority to seek voter-approved local sales taxes

Senate File 375, introduced by Senator Rest and discussed Feb. 26 in the Minnesota Senate Taxes Committee, would create a general authority allowing cities to propose voter-approved local sales taxes to fund projects of regional significance.

The bill enumerates qualifying project categories, sets a cap on new local sales taxes at a half-cent in most cases, creates a process for Department of Revenue review of eligibility, and includes an inflation adjustment for project revenues. The A5 author’s amendment was offered in committee, an oral revision deleting lines 1.2 to 3.3 was adopted, and the committee laid the bill over for possible inclusion.

Equalization and sharing pools. A major element in the discussion was an "equalization" mechanism that would withhold 5% (or 8% if the tax is imposed by special law) of a contributor city's local sales tax revenues and distribute those amounts to a pool of qualified recipient cities. Department of Revenue staffer Rachel Johnson walked the committee through multiple color-coded examples to illustrate how contributors and qualified recipients would be identified and how sharing pools would be allocated differently in metro and…