The city of Moose Lake may have to wait a while longer to learn if the local option sales tax that voters endorsed last November will make it through the legislature - but the wheels are currently in motion.
District 11 Senator Tony Lourey said he was expecting the "yellow jackets" (the three copies of the proposal for the Senate) on Wednesday.
"Moose Lake recently changed city administrators, so there was a bit of a disconnect for a time," said Lourey, "but now we're prepared to move forward. I plan to sign it and run it to the Senate desk and then send the 'green jackets' [the three copies for the House of Representatives] over to [District 11A] Representative Mike Sundin for consideration by that body."
Lourey said once the proposal for the local option sales tax is signed, it goes directly to the tax committee in both bodies in hopes of gaining a hearing for inclusion in the omnibus tax bill at the end of the session.
"In any case," said Lourey, "we won't know if it's successful until the end of May."
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Moose Lake voters approved a half-percent (or half-cent) local option sales tax for the city in the 2012 general election. 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 1 percent on these same products.
That 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 would not be taxed.
Following last fall's voter endorsement, city officials forwarded the proposal to the state for legislative approval during this year's session.
Lourey said he wanted to be frank in admitting that funding mechanisms such as local option sales taxes are, by and large, frowned upon by legislators on both sides of the aisle as a "piecemeal approach" to addressing local shortfalls and said they are "a matter of great debate and frustration" among legislators.
"The sense is that for rural communities, [local option sales taxes] are not really the best way to go," said Lourey. "For one thing, the process creates winners and losers. But the overriding argument is that cities would be better off having sufficient tax resources at the state level, such as through LGA-type arrangements."
Lourey admitted that the new method of dealing with local option sales tax proposals may change things, however. Up until recently, a community had to get endorsement from the legislature before taking the proposal to the voters. Now, the proposal is taken to the voters first before it is passed on to the legislature.
"This may change the dynamics [of how well things go in the legislature]," said Lourey, "but that is yet to be seen."
Moose Lake city administrators say 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, including the prison, the hospital, the Minnesota Sexual Offender Program, plus the schools and churches, resulting in a very low property tax base.
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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 has delineated three areas that sales tax proceeds could finance:
- Streets and related infrastructure;
- Parks, including the historic train depot and Riverside Arena; and
- The library in Moose Lake.
A sales tax would also give the city greater ability to keep up with the city's aging infrastructure.
If the state legislature approves the tax, then the city council will have to vote to implement it.
Lourey said he plans to champion the Moose Lake local option sales tax to the best of his ability, though he can't guarantee the eventual outcome.
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"It's hard when our communities have struggled with cuts in state aid for so long," he said. "We can do better if the state is living up to its obligations.
"We're the playground for the entire state," he concluded, "and it behooves the state to take care of it."
Pine Journal Editor Jana Peterson contributed to this story.
