HomeMy WebLinkAbout8.a. Half Cent Sales Tax RevocationCITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
CITY COUNCIL MEETING DATE: MARCH 2, 1992
There is a movement amongst counties to reconsider the half sales tax which
went into effect recently. The purpose of the tax was to supplement the
pool of funds available for aids to cities, counties and school districts.
Because of certain vetoes by Governor Carlson, counties may not receive any
funds from that half cent taxa
So, counties are considering revoking it.
As the attached memo suggests, if our County revokes it, we will not
receive any State Aids. This must be left in place.
I recommend that you consider adopting a motion to ask the County to not
revoke the tax and send a message on to the legislature asking them to
insure that legislation is put in place to insure that counties receive a
portion of that half cent tax.
RECOMMENDED ACTION:
Motion to ask Dakota County not to revoke the half cent salestaxin
Dakota County and that letter be sent to the Dakota Legislature and
Governor Carlson to insure that legislation is adopted to insure
Counties receive a proportional share of the tax.
COUNCIL ACTION:
AGENDA SECTION:
ADMINISTRATORS REPORT
AGENDA ITEM: HALF CENT SALES TAX REVOCATION
PREPARED BY: STEPHAN JILK, CITY ADMINISTRATOR
AGENDA NQ—
IRM
# 8 A
ATTACHMENTS: LEAGUE OF MINNESOTA CITIES MEMO
AP VE BY•
There is a movement amongst counties to reconsider the half sales tax which
went into effect recently. The purpose of the tax was to supplement the
pool of funds available for aids to cities, counties and school districts.
Because of certain vetoes by Governor Carlson, counties may not receive any
funds from that half cent taxa
So, counties are considering revoking it.
As the attached memo suggests, if our County revokes it, we will not
receive any State Aids. This must be left in place.
I recommend that you consider adopting a motion to ask the County to not
revoke the tax and send a message on to the legislature asking them to
insure that legislation is put in place to insure that counties receive a
portion of that half cent tax.
RECOMMENDED ACTION:
Motion to ask Dakota County not to revoke the half cent salestaxin
Dakota County and that letter be sent to the Dakota Legislature and
Governor Carlson to insure that legislation is adopted to insure
Counties receive a proportional share of the tax.
COUNCIL ACTION:
R[qj I
League of Minnesota Cities
February 25, 1992
183 University Ave. East
St. Paul, MN 55101.2526
(612) 227.5600 (FAX: 221-0986)
TO: Mayors, Managers, and Clerks
FROM. Donald A. Slater, Executive Director
SUBJECT: 1/2 Cent Sales Tax
The purpose of this memorandum is to alert cities to a proposal which
could seriously affect municipal revenue in the future.
The Association of Minnesota Counties (AMC) has circulated a
memorandum to Minnesota county commissioners proposing that counties
consider revoking the 1/2 cent optional sales tax.
The memorandum reasons that counties will receive no money from the
Local Government Trust Fund for calendar year 1993 and thereafter
because the legislature failed to override the Governor's line item
veto of the 1991 tax act. The memorandum also states the promises
of enacting legislatioin restoring the distribution is not a given and
the Governor and the legislature may raid the trust fund to balance
the state's budget.
AMC advises counties to remind their legislators and the governor that
the counties voted the 1/2 cent sales tax. If the counties don't
receive a portion of the funds from the trust fund, there is no reason
for the counties to support the tax.
Finally, the AMC provides a sample resolution for counties to pass
expressing the above sentiments to the Governor and the legislature.
It is obvious this move is intended to exert pressure on the
legislature and the Governor to produce a replacement mechanism for
the vetoed portion of the tax act. AMC also seeks to protect the
integrity of the Local Government Trust Fund. LMC and 'AMC share
these objectives.
However, the threat to revoke support for the trust fund is an
extremely serious matter for cities, especially. Without the trust
fund, cities, in any county revoking the 1/2 cent sales tax, would
Have no Iocal government aid, no housin anda ri.culture credit
assistance, no ispari y a no anything. The programs w is existed
e ore a creation of the rust fund really aren't there anymore and
would not be reconstituted if a county opted out of the trust fund.
Mayors, Managers, Clerks
Page 2
February 25, 1992
It is, of course, rather unlikely the legislature won't enact
legislation correcting the problem resulting from the Governor's line
item veto. But it could happen. Or, more likely, the programs
included in the trust fund could be shifted around so less of the
trust fund money would fund county programs. What would the counties
do then? Opt out, or continue their support of optional sales tax so
that city property taX*,. elief programs continue?
Should the Legislatut�r fai'L .to adopt,_ a new., trust fund distribution
formula this year, we would expect many counties to rescind the local
option tax and the whole trust fund concept to,collapse.,� However
there is a danger that some counties could act to rescind the tax,
even if the legislature passes a new distribution formula which is
satisfactory., but- not_, ideal. from the county, standpoint.. In view- of
this '` nazard; h encour ge io .
YAicials to take.;these.actzons,
1. Urge yours leq. i
slator to
� supWrt-, a new, `trust- ;fungi distribution
of..the trust'fund�a Y.. .
2. Urge _
g your county. of to continue to support the trust fund
a the 1/2w +cent lc ,al,.optiopl :tax,, provided: the ,l,eg3slsture
Paa ,<
� . .. _ _ , ,fundi d,�stributi�on formula -,11 Ask
them to be ca7r� o ary rer.Qluton . regard ini� reset ndinq : the ; . -
la;rib
- $
•: Ppta� on ; tax be, app c. Tont y in> :the event: th-at� no new r .
�d utiot}; forinu,a h1992, -sesss4_
3 Point`''out `to your county offisiais their action to„rescind ;the
local option tax could be negated by adoption of resolutions by
the, -c ty... o no ,and tboards having a', majority of_ the
coun'�s p_opi
i pow issue has such a� __. otentiall ` '
P y powerful impact on city finance that
being forewarned is being forearmed. I encourage city officials most
strongl x;.to. _deve-lop...&, contingency.. plan- meeting such ;an event:..,. I.
suggerj._,. Abu ccnteniplate: what actions
You might your city would take and whether
Y g Join* with city council`s representing a majority -of the
county's popIlatior�., to: reverse,, any,, county_ government decision to
revolve-' _su�PPorE, o the 1/2s Gent ,1Qca1,_ optional sales tax.
January
29,
TO:
0
FROM:
a,
RE:
R
1992
ASSOCIATION 1
i � 1
COMMISSIONERS
MULDER, EXECUTIVE DIRECTOR
OLUTION TO RESCIND LOCAL "OPTIONAL" SALES TAX
Recent disturbing events that occurred at the State Capitol have
prompted me to encourage AMC's member counties to consider revoking
the 1/2 cen "optional" sales tax. As you are probably aware, the
legislature failed in its attempt to override the Governor's line
item veto or Januaaiy 14. sy not accomplishing an override, current
law is stilin effect, which means that counties will receive no
money from he Local Government Trust Fund for calendar year 1993
and thereat er.
we have bee told that the legislature and Governor will enact
legislation to adopt,new aid formulas, but it is not as given. It
also is not clear as to what the distribution formula will include
and if the legislature and Governor will use the Local Government
Trust Fund lo balance the State's budget (a projected 340 million
short fall),
AMC believei that it is advisable to remind your legislators and
the Governoi that counties voted for the 112 cent State sales tax
increase to help Create the Local Government Truxt Fund. If
counties are no longer going to be a recipient of a portion of the
proceeds othe fund, there is no reason for ceuntiess to
participate in it. Therefore, it is recommended that -c:ountiess
consider pa sage of the accompanying resolution to "accent your
concerns. I is very important that all commissioners Continue to
contact the, legislators and the Governor to express concern about
our lost aid and the effect the loss of this aid will have on local
property tales.
125 CHARLES AVENUE ST. PAUL MINNESOTA 55103.2100 n12-224-4344 FAX 812-224-8540
COUNTY RESOLUTION TO REPEAL 1/2 PERCENT "OPTIONAL" SALES TAX
WHEREAS, the 1992 tax bill as passed by the state legislature
contained a provision for the establishment of a Local Government
Trust Fund, and
WHEREAS, it was the understanding of county governments at
the time of passage, that the additional one-half percent was added to
the State's sales tax to establish such a trust fund, and
WHEREAS, it was further understood that approximately two
cents of the sales tax and one-half cents collected would be dedicated
to this Local Government Trust Fund, and
WHEREAS, the establishment of such a trust fund would help to
keep property taxes low by providing a guaranteed flow of sale tax
income to county and township governments, and
WHEREAS, the Governor has eliminated county and township
Homestead and Agricultural Credit Aid from the distribution of Trust
Fund revenues through the use of his line item veto authority, and
WHEREAS, The legislature failed on its first attempt to
override the Governor's veto, so
THEREFORE, BE IT RESOLVED, that the ---------- County Board
Of Commissioners does hereby give notice that it is the intent of the
County Board of Commissioners to rescind the
"optionalm 1/2 percent sales tax thatwasjust passed by this same
board in 1991, if the Governor and Legislature fail to restore the
lost Homestead and Agricultural Credit and Disparity Reduction Aid
that resulted from the Governor's veto.