HomeMy WebLinkAbout[06] Coalition of Greater MN Cities •
CITY OF Slr. JOSEPH Council Agenda Item 6
MEETING DATE: June 7, 2012
AGENDA ITEM: Coalition of Greater MN Cities
SUBMITTED BY: Administration
BOARD /COMMISSION /COMMITTEE RECOMMENDATION:
PREVIOUS COUNCIL ACTION:
BACKGROUND INFORMATION: The CGMC annually reports to member cities at the end of each legislative
session. This agenda items is for information.
Included in the packet of information is the summary of the efforts on the extension of the local one -half cent
sales tax.
BUDGET /FISCAL IMPACT:
ATTACHMENTS: Request for Council Action
Summary Local Sales Tax Effort
REQUESTED COUNCIL ACTION: Informational only
This page intentionally left blank
F £ ; FLAHERTY HOOD P.A.
May 31, 2012
Judy Weyrens
City Administrator
City of St. Joseph
P.O. Box 668
St. Joseph, MN 56374 -0668
Dear Ms. Weyrens:
This letter, and the accompanying attachments, serves as the final report from Flaherty &
Hood, P.A. to the cities of St. Augusta, St. Joseph, Sartell, Sauk Rapids and Waite Park in
relation to work done during the 2012 Session of the Minnesota Legislature. A copy is
being sent to each city. Flaherty & Hood, P.A. commenced services on behalf of the five
cities on February 15, 2012, with the goal of securing an extension of the St. Cloud Area
cities' local option sales tax.
BACKGROUND
Since 2002, some combination of the cities listed above, plus St. Cloud, have
administered a local option sales tax collected in each participating jurisdiction. The
funds are distributed as prescribed by a joint powers agreement amongst the participants.
Over the years, the dollars collected from the local sales tax have funded large, agreed
upon capital projects such as a new St. Cloud Regional Library and improvements to the
St. Cloud Regional Airport. Each participating city has also received a portion of the
sales tax funds to spend on projects as prescribed in state statute.
During the 2012 Session, the joint powers group introduced legislation to give the cities
authority to hold referenda to extend the sales tax collection period to 2038. The current
taxing authority is due to expire in 2018.
Flaherty & Hood, P.A. was hired to represent five of the six cities in the joint powers
group approximately three weeks after the beginning of the 2012 Legislative Session.
Bradley Peterson was designated as the primary Flaherty & Hood staff member working
on the project.
LEGISLATIVE ACTIVITY
Prior to Flaherty & Hood being hired, work in drafting legislation for introduction had
begun with Jan Peterson collaborating with Senate Counsel. Chief authors in the House
and Senate (Rep. O'Driscoll and Sen. Pederson) had also been secured.
rcJ -E-E 4j: _:;c is rTE � t �i . .. �� �
a il�� rC!' � ti
Judy Weyrens
City of St. Joseph
May 31, 2012
Page 2
Upon review of the legislation, it was determined that an amendment would need to be
drafted to be consistent with the intent of the cities and to secure the support of the Senate
and House Tax Committee chairs. The amendment ensured that proposed exemptions
from current law were narrowly tailored so that the extension of the tax was consistent
with Department of Revenue practices. Mr. Peterson worked with House Research,
Senate Counsel, and the bill authors to ensure that this amendment was ready by the time
the bill would be heard in committee (copies of the legislation as introduced and as
amended are included in this report).
In March, staff at Flaherty & Hood, with input from the cities, created a handout
(included) to be used while lobbying the project with members of the legislature. This
handout highlighted the proposal's value by emphasizing strong regional cooperation and
the important regional projects that have been completed with sales tax dollars. It also
emphasized the need to start the sales tax renewal process early so that potential future
projects could be thoroughly vetted and the public could be educated ahead of each city's
referendum.
Mr. Peterson also drafted talking points that could be used by advocates and bill authors
when presenting the legislation.
The bill was heard in the House Property and Local Tax Division on March 14, 2012.
Rep. O'Driscoll presented the bill and fielded questions from the committee. It was then
"laid over" for possible inclusion in the House Tax Omnibus Bill. Ahead of this hearing,
Sartell City Councilwoman Sarah Jane Nicoll, Sartell Planning and Community
Development Director Anita Rasmussen, and Mr. Peterson lobbied several members of
the committee. Rep. O'Driscoll also personally lobbied many of his colleagues on the
committee.
The bill was heard in the Senate Tax Committee on March 29, 2012. In addition to Sen.
Pederson, Waite Park Mayor Rick Miller and Sartell City Councilwoman Nicoll
presented the bill and fielded questions. It was likewise laid over for possible inclusion in
the Senate's Tax Omnibus Bill. Again Mr. Peterson and Sen. Pederson lobbied several
members of the committee ahead of the hearing.
The sales tax extension was included in the House Tax Bill (H.F. 2337) which passed off
the House floor on March 21, 2012. The Senate took a less conventional approach and
prepared two tax bills - -one more controversial bill with budget impacts (S.F. 1972) and a
second bill, which was referred to as technical and non - budget in nature (S.F. 2136). The
sales tax extension was included in this second Senate bill, S.F. 2136.
Judy Weyrens
City of St. Joseph
May 31, 2012
Page 3
As the session developed, it was clear that the tax bill preferred by the legislature would
not be acceptable to Governor Dayton, as it included several business tax breaks which
were not otherwise offset with increases in revenue or reductions in other areas of
spending. Throughout the session, the Governor repeatedly stated that he was against
increasing the size of the next biennium's projected deficit. It was clear even before the
first tax bill was sent to the Governor that a second "non- controversial" tax bill would be
necessary. The need for a second tax bill became one of the primary points for lobbying
during this period.
On May 3, 2012 the first tax bill (H.F. 2337) was sent to the Governor, who quickly
vetoed it the next day. This bill included the sales tax exemption.
FINAL OUTCOME
Following the veto of the first tax bill, much legislative focus shifted to the Vikings
Stadium issue. Throughout this period, there were periodic attempts between the
legislature and the Dayton Administration to negotiate a second tax bill, but these efforts
came to nothing. On the last full day of session, May 9, the legislature quickly passed a
second tax bill, H.F. 247, which included the sales tax extension. However, it was
unclear if this bill would be acceptable to Governor Dayton, as it still increased the deficit
in the next biennium, albeit by a lesser amount than the original vetoed tax bill.
In response to this uncertainty, Flaherty & Hood, P.A. encouraged the cities to contact the
Governor's office to urge him to sign the bill. Citing similar concerns to the first tax bill,
the unpaid for business tax reduction in the next biennium and the imbalance between
property tax cuts for businesses properties and lack of reductions for other types of
property, the Governor vetoed H.F. 247. With the legislature adjourned sine die, there
was not another opportunity to pass this legislation in the 2012 Session and our primary
goal was not realized.
CONCLUSION AND NEXT STEPS
Though unsuccessful due to the larger atmosphere that currently pervades policy making
in Minnesota, advocates did accomplish several positive things including: forging strong
support for the extension with local legislators, educating the legislature on the uses of
the current sales tax and its potential for the future, demonstrating strong community and
business support for the extension, and sharpening arguments for why the extension
needs to be done sooner rather than later.
Judy Weyrens
City of St. Joseph
May 31, 2012
Page 4
Assuming that area cities wish to advocate for an extension of the sales tax in 2013, there
are a couple of strategic considerations which may influence how to proceed:
• 2012 is an election year, which means the community has a great opportunity to
raise this issue with candidates. Communities should seek commitments of
support from current and potential lawmakers.
• Cities should use the time period between now and the 2013 Session to continue
to build and formalize support from local businesses and other community groups.
• Cities should be prepared for a significantly different legislature in 2013. With
redistricting, record numbers of retirements, and the potential of one or both
houses of the legislature changing party control, this effort could face a very
different landscape when the legislature reconvenes on January 8, 2013.
• Be prepared to act quickly to position your proposal and find chief authors as
soon as possible after the November election.
It has been a pleasure working on behalf of all five communities during this session. I
hope that we can be of service to you in this effort during the 2013 Session. Please do not
hesitate to contact us with questions about the 2012 Session or how to best position this
proposal for the 2013 Session.
Best Regards,
Bradley Peterson
Senior Attorney /Lobbyist, Flaherty & Hood, P.A.
St. Cloud Area Sales Tax Supports Regional Growth and Development
St. Augusta - St. Cloud - St. Joseph - Sartell - Sauk Rapids - Waite Park
History
•
Since 2002, the St. Cloud area cities of St. f, k
Cloud, Sartell, Sauk Rapids, and St. Augusta A .!
tt
have had a sales tax imposed in each city for
the benefit of regional projects. In 2006 (iq•]t RI%erRegione) Waite Libra)
Park and St. Joseph joined this group with the
Structure of Regional Sales Tax
passage oflocal referenda. Over the years the
sales tax has funded projects such as:
Proceeds from the tax are shared according to
• St. Cloud Regional Library Building a joint powers agreement between the six area
St. Cloud Regional Airport Improvements cities. The agreement specifies an amount to be
• • Regional Park & Trail Acquisition,
spent on common regional projects, as well as
Development and Improvement within the share ofproceeds that each individual city
each participating city
gets to fund authorized categories ofprojects.
• Regional community facilities such as
athletic fields, branch libraries, community The legislation specifies that a referendum to
centers
extend the tax will be held and will require that
Regional Transportation Projects within the referendum language specify what projects
• each participating would be funded, as it has in the past.
city
The tax would be extended until 2038.
,:s ; Th categories of projects to be
Li
Sr C)nud ROginnn) -�
,„ „ �� funded would remain the same as is
Agmn ) •� _. �� �� �t
currently in law.
Why Does the Extension Need to Be Done Now?
Even though the sales tax authorization does not expire until 2018 it is important to start the
process now for several reasons:
• Allow sufficient time for community leaders to do long range planning for common regional
projects to be funded by the sales tax
• Allow sufficient time for community input and discussion on proposed specific projects in each
city
• Allow time for sufficient community education before a sales tax extension referendum would
be held
Prerarrd h, Flahcrt, & Hood PA. 3. 12.12
02/14/12 REVISOR AML/NM 12 -5012
This Document can be made available
in alternauve formats upon request State of Minnesota
HOUSE OF REPRESENTATIVES E
EIGHTY - SEVENTH SESSION H. F. No. 2535
02/27/2012 Authored by O'Dnscoll, Gottwalt. Bauman, lioscb and Davids
The bill was read for the first tune and referred to the Committee on Taxes
1.1 A bill for an act
1.2 relating to taxation; sales and use; local government; modifying local sales and
1.3 use tax for St. Cloud area cities; amending Laws 2005, First Special Session
1 4 chapter 3, article 5, section 37, subdivisions 2, 4.
1.5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1 Section 1. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
1.7 2, is amended to read:
1.8 Subd. 2. Use of revenues. (a) Revenues received from the tax authorized by
1.9 subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
1.10 administering the tax and to pay all or part of the capital or administrative costs of the
1.11 development, acquisition, construction, improvement, and securing and paying debt
1.12 service on bonds or other obligations issued to finance the following regional projects as
1.13 approved by the voters and specifically detailed in the referendum authorizing the tax or
1.14 extending the tax:
1.15 (1) St. Cloud Regional Airport;
1.16 (2) regional transportation improvements;
1.17 (3) regional community and aquatics centers and facilities;
1.ta (4) regional public libraries; and
1.19 (5) acquisition and improvement of regional park land and open space.
1.20 (b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
1.21 Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
1.22 collecting and administering the tax and to pay all or part of the capital or administrative
1.23 costs of the development, acquisition, construction, improvement, and securing and paying
1.24 debt service on bonds or other obligations issued to fund the projects specifically approved
Section L 1
02/14/12 REVISOR AML/NM 12 -5012
2 I by the voters at the referendum authorizing the tax or extending the tax. The portion of
2.2 revenues from the city going to fund the regional airport or regional library located in the
2.3 city of St. Cloud will be as required under the applicable joint powers agreement.
2.4 (c) The use of revenues received from the taxes authorized in subdivision 1 for
2.5 projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
2 6 each project under the enabling referendum.
2 7 Sec. 2. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision 4,
2.8 is amended to read:
2.9 Subd. 4. Termination of tax. The tax imposed in the cities of St. Joseph, St. Cloud,
2.10 St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
2.11 city council determines that sufficient funds have been collected from the tax to retire or
212 redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
213 later than December 31, 2018. Notwithstanding Minnesota Statutes, section 297A.99,
2.14 subdivision 3, a city may extend the tax imposed under subdivision 1 through December
215 31, 2038, if approved under the referendum authorizing the tax under subdivision 1 or if
216 approved by voters of the city at a general election held no later than November 6, 2018.
2.17 Sec. 3. EFFECTIVE DATE.
2.18 Sections 1 and 2 are effective for the city that approves them the day after
2.19 compliance by the governing body of each city with Minnesota Statutes, section 645.021,
2.20 subdivision 3.
Sec. 3. 2
HF2535 Status in House for Legislative Session 87 Page 1 of 1
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HF2535 Status in House for Legislative Session 87
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House O'Driscoll ; Gottwalt ; Banaian ; Hosch ; Davids
Authors
Short St. Cloud; local sales and use tax modified.
Description
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1 12Ale_,L II Action 1 Description / Committee I Text Pape 1RolI Call
02/27/2012 Introduction and first reading, Taxes Intro 5758
referred to
102/28/2012 Referred by Chair to 'Property and Local Tax Division 1 ,
SENATE Actions HOUSE Actions Top
None.
Please direct all comments conceming issues or legislation
to your House Member or State Senator.
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last updated: 01/0512012
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SF1968 Status in Senate for Legislative Session 87
Bill Name: SF1968 Companion: HF2535 Revisor Number: 12-5012
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Senate Pederson ; Fischbach
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Short St. Cloud area cities local sales and use tax extension and termination delay
Description
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SENATE Actions HOUSE Actions Top
Date I I Action 1 Description / Committee II Text fraell Roll Calll
02/20/2012 Introduction and first reading Intro 3856
102/20/2012 IlReferred to !Taxes
IISee SF2136, Art. 9, Sec. 5-6
See HF247, Art. 9, Sec. 13-14
(vetoed)
HOUSE Actions SENATE Actions Top
None.
Please direct all comments concerning issues or legislation
to your House Member or State Senator.
For Legislative Staff or for directions to the Capitol, visit the Contact Us page.
General Questions or comments.
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HF2337 FOURTH ENGROSSMENT REVISOR EE 1- 12337 -4
641 30 days or more only upon the approval of the city governing body of a total financial
64.2 package for the project.
64.3 Subd. 2. Disposition of proceeds. (a) The gross proceeds from the tax imposed
64 4 under subdivision 1 must be used by the city to fund a local convention or tourism bureau
64.5 for the purpose of marketing and promoting the city as a tourist or convention center.
64 6 (b) The gross proceeds from the one three percent tax imposed under subdivision
64.7 la shall be used to pay for (1) construction, renovation, improvement, and expansion of
64. the Mayo Civic Center and related skyway access, lighting, parking, or landscaping; and
64.9 (2) for payment of any principal, interest, or premium on bonds issued to finance the
64.10 construction, renovation, improvement, and expansion of the Mayo Civic Center Complex.
64. Subd. 2a. Bonds. The city of Rochester may issue, without an election, general
64.12 obligation bonds of the city, in one or more series, m the aggregate principal amount
64 .13 not to exceed $43,500,000, to pay for capital and administrative costs for the design,
64.14 construction, renovation, improvement, and expansion of the Mayo Civic Center Complex,
64.15 and related skyway, access, lighting, parking, and landscaping. The city may pledge
64.16 the lodging tax authorized by subdivision 1a a.nl t1,.. fw J a,,d L�Y�,a taX autlj ji;
64.17 • .: •, • . : , ., , , to the payment of the bonds. The debt
64.18 represented by the bonds is not included in computing any debt limitations applicable to
64,19 the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
64.20 principal of and interest on the bonds is not subject to any levy limitation or included in
64.21 computing or applying any levy limitation applicable to the city.
64.22 Subd. 3. Expiration of taxing authority. The authority of the city to impose a
6423 tax under subdivision 1a shall expire when the principal and interest on any bonds or
64.24 other obligations issued prior to December 31, 201# 2016, to finance the construction,
64.25 renovation, improvement, and expansion of the Mayo Civic Center Complex and related
6426 skyway access, lighting, parking, or landscaping have been paid, including any bonds
64.27 issued to refund such bonds, or at an earlier time as the city shall, by ordinance, determine.
64.28 Any funds remaining after completion of the project and retirement or redemption of the
64.29 bonds shall be placed in the general fund of the city.
64.30 EFFECTIVE DATE. This section is effective the day after the governing body of
64.31 the city of Rochester and its chief clerical officer comply with Minnesota Statutes, section
64.32 645.021, subdivisions 2 and 3.
``01f S•145 64.33 Sec. 12. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
Td.tt Ie 'Shk
6434 2, is amended to read: •
Article 3 Sec. 12. 64
HF2337 FOURTH ENGROSSMENT REVISOR EE 1
65.1 Subd. 2. Use of revenues. (a) Revenues received from the tax authorized by
65.2 subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
65.3 administering the tax and to pay all or part of the capital or administrative costs of the
654 development, acquisition, construction, improvement, and securing and paying debt
65.5 service on bonds or other obligations issued to finance the following regional projects as
65 6 approved by the voters and specifically detailed in the referendum authorizing the tax or
65.7 extending the tax:
658 (1) St. Cloud Regional Airport;
65.9 (2) regional transportation improvements;
65.10 (3) regional community and aquatics centers and facilities;
65.11 (4) regional public libraries; and
65.12 (5) acquisition and improvement of regional park land and open space.
65.13 (b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
65.14 Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
65.15 collecting and administering the tax and to pay all or part of the capital or administrative
65.16 costs of the development, acquisition, construction, improvement, and securing and paying
65.17 debt service on bonds or other obligations issued to fund the projects specifically approved
65.18 by the voters at the referendum authorizing the tax or extending the tax. The portion of
65.19 revenues from the city going to fund the regional airport or regional library located in the
65.20 city of St. Cloud will be as required under the applicable joint powers agreement.
65.21 (c) The use of revenues received from the taxes authorized in subdivision 1 for
65.22 projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
65.23 each project under the enabling referendum. .
65.24 EFFECTIVE DATE. This section is effective for the city that approves them the
65,25 day after compliance by the governing body of each city with Minnesota Statutes, section
• 65.26 645.021, subdivision 3.
65.27 Sec. 13. Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
65.28 4, IS amended to read:
65.29 Subd. 4. Termination of tax. The tax imposed in the cities of St. Joseph, St, Cloud,
65.30 St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
65.31 city council determines that sufficient funds have been collected from the tax to retire or
65.32 redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
65.33 later than December 31, 2018. Notwithstanding Minnesota Statutes, section 297A.99,
65.34 subdivision 3. paragraphs (a), (c), and (d), a city may extend the tax imposed under
65.35 subdivision 1 through December 31, 2038. if approved under the referendum authorizing
Article 3 Sec. 13. 65
HF2337 FOURTH ENGROSSMENT REVISOR EE H2337 -4
66.1 the tax under subdivision 1 or if approved by voters of the city at a general election held
66 2 no later than November 6, 2017.
66.3 EFFECTIVE DATE. This section is effective for the city that approves them the
66.4 day after compliance by the governing body of each city with Minnesota Statutes, section
-r1Ok SchcS 66.5 645.021, subdivision 3.
I pcl; SIw4; a r%
U 66 6 Sec. 14. Laws 2008, chapter 366, article 7, section 19, subdivision 3, as amended by
66.7 Laws 2011, First Special Session chapter 7, article 4, section 8, is amended to read:
66.8 Subd. 3. Use of revenues. Notwithstanding Minnesota Statutes, section 297A.99,
66.9 subdivision 3, paragraph (b), the proceeds of the tax imposed under this section shall be
66.10 used to pay for the costs of improvements to the Sportsman ParkBallfields, Riverside
66.11 Park, Lions Park/Pavilion. Cedar South Park also known as Eldorado Park, and Spring
66.12 Street Park; improvements to and extension of the River County bike trail; acquisition;
66.13 and constructio , • . , . .. .. ... , . • ...
66. laud, ., opac., p..d of a pedestrian ..1kways, c'
66 15 ad., L flu. by 12, 2006, ou,d walkway over
6616 Interstate 94 and State Highway 24; and the acquisition of land and construction of
66.17 buildings for a community and recreation center. The total amount of revenues from the
66.18 taxes in subdivisions 1 and 2 that may be used to fund these projects is $12,000,000
66.19 plus any associated bond costs.
66.20 EFFECTIVE DATE. This section is effective the day after compliance by the
66.21 governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
66,22 subdivisions 2 and 3.
66.23 Sec. 15. REPEALER.
66.24 (a) Minnesota Statutes 2011 Supplement, section 289A.60, subdivision 31, is
66.25 repealed.
66.26 (b) Laws 2009, chapter 88, article 4, section 23, as amended by Laws 2010, chapter
66.27 389, article 5, section 4, is repealed.
66.28 EFFECTIVE DATE. Paragraph (a) is effective for taxes due and payable after June
66.29 30, 2012. Paragraph (b) is effective the day following final enactment.
Article 3 Sec, 15. 66