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HomeMy WebLinkAbout[06a] Sales Tax Extension 6(a) Council Agenda Item MEETING DATE: December 20, 2012 AGENDA ITEM: Sales Tax Extension – lobby services SUBMITTED BY: Administration BOARD/COMMISSION/COMMITTEE RECOMMENDATION: PREVIOUS COUNCIL ACTION: In 2012 the City participated with the Cities of Waite Park, Sartell, and Sauk Rapids in contracting for lobbying services for the extension of the one-half cent sales tax. The lobbying services were provided by the Coalition of Greater MN Cities. BACKGROUND INFORMATION: The area City Administrators and Mayors meet recently to discuss the extension of the one-half cent sales tax and timing for requesting and whether lobbying services should be pursued. Collectively the area Cities agreed that we should move forward in 2013 to try and secure the needed and legislation and due to the change in legislators, hiring a lobbyist would also be prudent. The City of St. Cloud has agreed to participate in the lobbying services this time as well. However, they requested that we should try and negotiate a lower price for the lobbying services. As can be seen from the following material, the Coalition of Greater MN Cities cannot reduce the cost as the effort will include additional work and last year the services exceeded the amount they charged. The funds for the lobbying services could be paid through the refuse fund as we did in 2012. BUDGET/FISCAL IMPACT: $ up to 2,500 ATTACHMENTS: Request for Council Action Email Correspondence REQUESTED COUNCIL ACTION: Authorize the expenditure to participate in the lobbying services for extending the one-half cent sales tax, for a cost not to exceed $ 2,500 hiring the Coalition of Greater MN Cities. This page intentionally left blank Judy Weyrens From:Shaunna Johnson <Shaunna.Johnson@ci.waitepark.mn.us> Sent:Monday, December 17, 2012 5:22 PM To:Patti Gartland; 'Michael Williams'; ROLSON@ci.sauk-rapids.mn.us; 'Bill McCabe'; Judy Weyrens Subject:Sales Tax Lobbying Follow Up Good Afternoon, Patti received a call from Bradley earlier today. He said he spoke with Tim yesterday about the pricing modification request. Long & short, they are unable to offer an alternative structure that would render a lesser fee quote. He noted that they do not have nor do they anticipate any additional client work for sales tax legislation – Mankato is opting not to pursue sales tax related legislation this year. He also noted that they expended $11,500 in services last year on our legislative request and they are quite certain the challenges this session will be notably greater this year (as he outlined in his memo). As such, they believe $12,500 is the absolute best price they can provide to us. Please feel free to call Bradley or Tim if you’d like to talk with either about this situation. I think they served us very well last year and I don’t think we’ll find a credible, lower quote from another lobbyist. The amount comes to $2,083 per city versus the $1,500 per city that was suggested. Our council will be considering this tonight at our council meeting. Please let the group know how each of you intend to proceed. Are you comfortable with the current amount proposed by Flaherty and Hood and willing to proceed with hiring them to assist us with lobbying? I look forward to hearing from everyone and hope you have a great holiday! ~Shaunna 1 F FLAHERTY HOOD P.A. October 18,2012 Patti Gartland City of Sartell PO Box 140 Sartell,MN 56377 Patti, Thank you for your inquiry regarding engaging Flaherty&Hood, P.A.to assist the Central Minnesota cities with the extension of the area cities'local option sales tax. We very much enjoyed working on this project in the 2012 session. Flaherty&Hood has extensive experience in assisting cities with local tax authorizations including work on behalf of Rochester,Winona,North Mankato,Owatonna,Mankato,and the St.Cloud area cities.No other firm has as much experience in this area as Flaherty&Hood. Analysis of the 2013 Session Through it is still uncertain which party will control either chamber of the legislature after the Nov.6 election there are several things that we do know about the 2013 session.2013 will be a so-called "long session" as it will be when the legislature and governor determine the budget for the 2014-2015 biennium. It is also likely that there will be significant discussions regarding reform of numerous areas of the state's tax system.This background noise will complicate and draw out legislative deliberations and virtually ensure that any omnibus tax bill will not be agreed upon between the legislature and governor before the middle of May.This will be especially true if, as we expect,one or both houses of the legislature continues to be controlled by the Republicans.Naturally this is because Minnesota will still have a divided government with Governor Dayton still in office. Fee for Service and Scope of Services Based on our analysis of the 2013 session and the long history our firm has with the Central Minnesota cities we are pleased to offer legislative services for a flat fee of$12,500(5 X$2500 or 6 X$2083.33 depending on the number of cities that participate).This estimate is based on the fact that 2013 is a budget session and the known potential obstacles to passage of this legislation. This fee would cover services beginning November 1,2012 and run through the end of the 2013 legislative session.Activities included within the scope of service are the following: • Development of a legislative strategy • Assistance securing lead and co-authors for the legislation • Assistance with drafting of legislation • Development of handouts for lobbying • Direct lobbying of tax committee chairs,tax committee members, and other key legislators as appropriate • Assistance with developing testimony for committee hearings • Direct lobbying of Governor's Office • Assistance and follow-through at every step of the legislative process Lobbying Team Flaherty &Hood lobbyists have over 50 years combined of experience. By virtue of our practice Flaherty & Hood has built relationships with a wide cross section of legislators from both parties and from all across the state. To ensure that our clients get the best possible service we operate based on a team approach. Senior Attorney/Lobbyist Bradley Peterson would take day to day responsibility for ensuring that your goals are advanced at the legislature. Firm Principal Tim Flaherty would assist and consult with Mr. Peterson as necessary. Our firm would also be able to mobilize any of our other lobbyists at critical times including potential committee or floor actions. Conclusion Much was accomplished in 2012 to advance this important legislation for the cities involved. We look forward to the opportunity to work with you and St. Cloud area legislators to finish the work that was started last year.As you review this proposal please do not hesitate to be in touch with any questions. Very truly yours, FLAHERTY&HOOD,P.A. Bradley Peterson Senior Attorney/Lobbyist F FLAHERTY HOOD P.A. Nov. 7, 2012 Patti Gartland City of Sartell PO Box 140 Sartell, MN 56377 Patti, Per your request for a memo analyzing the 2012 legislative election results and their impact on the St. Cloud area local option sales tax effort in the 2013 session,I am pleased to provide the following for your review. Summary of 2012 Effort Last session's success in passing the local option sales tax extension out of the legislature was the product of significant effort on the part of the cities involved and the legislative sponsors of the measure, especially Rep. O'Driscoll and Sen.Pederson. Local city officials and Flaherty&Hood staff held countless meetings with tax chairs,committee staff,and other key legislators in order to successfully include the measure in the Omnibus Tax Bill(which was of course vetoed by Governor Dayton). Especially unclear was how the measure would be viewed by Senate Tax Chair Sen. Ortman who had a strong preference that local option sales tax referendum be held prior to the local communities approaching the legislature for authorization.Ultimately,she was convinced that the St. Cloud tax extension was similar to the Rochester sales tax extension that had been passed the year before with the requirement that there would be a referendum before the expiration of the current tax. The other questions raised had to do with the-duration of the extension and the fact that the communities were coming to the legislature well before the current tax is set to expire. Outcomes of the 2012 Election At the statewide level the election results are fairly significant. Whereas the 2010-2011 legislature saw both the MN House and MN Senate in Republican hands,the results of last nights' election flip that dynamic with the partisan divide in the House being(assuming all recounts go to the current leader)a 73- 61 majority in the House for the DFL and a 38-29 DFL majority in the Senate. In the St. Cloud area locally two seats changed party hands with republican King Banaian being defeated by DFL'er Zach Dorholt and the open seat formerly held by Larry Hosch(DFL)going to republican Jeff Howe. The net outcome however is that only one member of the St. Cloud area delegation will belong to the majority party whereas in the previous legislature only one member(Larry Hosch)was not in the majority. Potential Tax Chairs Historically Cool Towards Local Option Sales Taxes Changing majorities of course mean new chairs of the Tax Committees in the House and the Senate. While the tax chairs have yet to be appointed we do know who the leading contenders are in the House and the Senate. It is almost a certainty that Rep.Ann Lenczewski(DFL—Bloomington)will be the House Tax Chair. She was previously the Tax Chair when the DFL held control of the House from 2007-2010. While she was Tax Chair she was notoriously against granting cities local option sales taxes. In the Senate there are two current potentials for Tax Chair, Sen. Rod Skoe (DFL—Clearbrook)and Sen. Ann Rest(DFL—New Hope). Both Sen. Skoe and Sen. Rest have previous experience serving on the tax committee. While not completely antithetical to all local option sales taxes he has historically been a skeptic of them. Sen. Rest's position is less well known. It is clear passing local option sales tax legislation out of the legislature will be more difficult in this session than it was in the last one because of the probable resistance of the likely tax chairs. Partisan Make-up of St.Cloud Delegation As noted above only one member of the St. Cloud delegation is in the majority in either body,that being Representative-Elect Dorholt. As a freshmen member of the new majority he may have some leverage to push for the sales tax extension by making the case that he needs to deliver this for the community. His job,however,will be difficult and lonely. The fact that both Senators are out of the majority in the Senate means that they will need to work extremely hard to curry the good graces of Senate majority members. This is doable, but they will need strong support from the local community. This is not to say that members of the minority party can't get things done for their communities,but it is more difficult and may require them to make compromises that they may not want to make. Conclusion Clearly the election results create a lot of uncertainty when it comes to the prospects of extending the local option sales tax. Success in 2013 will require an even stronger effort than was mounted in 2012. Local chambers of commerce and other civic institutions and leaders will need to speak out strongly in favor of the extension. Local legislators, especially Representative-Elect Dorholt, will need to have the full and unambiguous support from the community in order to be successful. In conclusion the 2012 election results reshuffle the deck when it comes to this effort. Success last year- under completely different circumstances -mean little for 2013. Success in 2013 is possible, but electoral outcomes mean we are starting almost from square one. Very truly yours, FLAHERTY&HOOD,P.A. Bradley Peterson Senior Attorney/Lobbyist This page intentionally left blank