Moose Lake asks voters to approve local option sales taxThanks to a change in state law, what took Cloquet more than a decade to achieve – getting permission to ask voters to approve a local option sales
By: Jana Peterson, Pine Journal
Thanks to a change in state law, what took Cloquet more than a decade to achieve – getting permission to ask voters to approve a local option sales tax – took only a city council vote for Moose Lake this year.
Now, instead of first getting approval from the state legislature and then holding a vote, Minnesota cities can hold the vote first. If it passes, then city officials must send the proposal off to the state for legislative approval, according to Moose Lake City Administrator Mark Vahlsing.
Like Cloquet, Moose Lake is asking voters to approve a half-percent (or half-cent) local option sales tax for the city. Currently, the state of Minnesota levies a 6.875 percent tax on the purchase of certain products. The local option sales tax allows local communities to impose up to an additional one percent on these same products.
A sales tax would apply to anyone shopping in Moose Lake – not only property owners as is the case with property taxes. Items such as food, clothing, gasoline, fuel oil and prescriptions will not be taxed.
Vahlsing said the local option sales tax is an important funding mechanism for Moose Lake because 75 percent of the property in the city is tax-exempt.
“We have such a high amount of tax exempt land, including the prison, the hospital, MSOP [Minnesota Sexual Offender Program] plus the schools and churches, that we have a very low property tax base,” Vahlsing said. “That [low property tax base] makes it very difficult to keep up with streets and aging infrastructure.”
Vahlsing said the city estimates proceeds from a local option sales tax at between $150,000 and $200,000 annually (based on information from the Carlton County Economic Development Authority) and the sales tax would be authorized for 25 years.
The Moose Lake City Council vote delineated three areas that sales tax proceeds could finance:
- Streets and related infrastructure;
- Parks, including the Historic Trial Depot and Riverside Arena [the hockey rink that was under 5-feet of water this summer but it up and running now];
- The library in Moose Lake
“A sales tax would give us more ability to keep up with an aging infrastructure,” Vahlsing said. “This has been talked about for several years, but I believe this is the first year the council has actually voted to ask for it.”
If Moose Lake voters approve the half-percent local option sales tax, then the city would have to ask the legislature for approval during the next session, Vahlsing said. If the state legislature approved the tax, then the city council would have to vote to implement the tax.
A number of other area cities already have a sales tax. Duluth currently charges a 1 percent sales tax on all purchases within the city. The cities of Two Harbors, Proctor and Hermantown also have their own half-percent local option sales tax and Hermantown is asking voters to approve expanding its tax to 1 percent this fall.