Decision To Extend Rochester Sales Tax Expected Monday

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Rochester, MN (KROC AM News) - The Rochester City Council is scheduled to take the first formal step in seeking another extension of the local sales tax on Monday.

The tax has been collected for nearly 40 years and raised about $300-million for various projects.

The council is considering an extension that would keep the half-cent tax around until around 2040.

The City Council Monday will vote on a recommendation to seek voter and legislative approval for another extension that would raise more than $200-million to pay for projects including streets and housing.

Here is a summary of the information given to the council:

Cities have the ability to enact a local option sales tax with the approval of both the legislature and the voters. Toward that end, Rochester has had a local option sales tax in place since the 1980s. The most recent general local option sales tax was enacted in 2013 and funded a number of significant projects that have benefited the community, region, and State of Minnesota. The existing tax enacted in 2013 generates $12-13M per year and is projected to meet all of its funding obligations by 2024. Since our general local option sales tax was enacted in 2013, significant changes to State law have occurred. These changes include:
1. State Approval First - The State must approve legislation prior to the local vote taking place.
2. Limited to Five Projects - Cities are limited to submitting no more than five projects. Our current legislation features over 20 projects that reflected a community based solicitation. This significantly limits our ability to balance many regional investments. It also orients the scale of project selection toward larger investments.
3. General Election - The local voter approval must occur at a General Election (November of 2022 and November of 2024). This interacts with the requirement to have legislative approval above. There are also timing issues on representing the issue to voters in the event of denial.
4. Individual Project Approval - When presented to the voters, all projects are approved individually on a project by project basis (Project 1 can be approved while Project 2 can be rejected, etc.) In the past, projects were approved as a package/collectively.
All of these changes have strategic implications on both the process and project selection. In addition, projects need to be capital in nature with the regional economic benefit being defined. If we are interested in advancing legislation this session, we must make a request at this Special City Council meeting and transmit the approved Resolution to the respective legislative representatives.

The tax was initially adopted to pay for the city’s flood control project in 1982 and it has been extended several times. It is currently projected to end in 2024. City officials say the tax has generated annual collections of $12 - $13-million.

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