HF4923

Purpose

• Create a temporary sales and use tax exemption (refundable) for construction materials, supplies, and equipment used in a specified public works project in Cottage Grove. The exemption applies to materials purchased for a particular street rehabilitation project and is designed to support clean water infrastructure efforts.

Main Provisions

• Targeted exemption: Materials, supplies, and equipment used or consumed in and incorporated into the TH 6180th Street Rehabilitation Project from Highway 61 to Ideal Avenue South in the City of Cottage Grove are exempt from sales and use tax under Minnesota Statutes chapter 297A.
• Eligible purchase window: The exemption applies to items purchased after March 31, 2026 and before January 1, 2028.
• Refund mechanism: The exemption is handled as if the tax rate under Minn. Stat. 297A.62 (subdivisions 1 and 1a) applied and then refunded in the same manner provided for projects under Minn. Stat. 297A.75 (subdivision 1, clause 17). In other words, the tax is collected as usual and then refunded to reflect the exemption.
• Project scope: The exemption is tied to a specific road rehabilitation project intended to improve a primary connection to Highway 61 in Cottage Grove.

Financial/ Fiscal Impact

• Funding for refunds: The amount needed to pay the refunds under the exemption is appropriated from the general fund to the commissioner of revenue.

Timing and Duration

• Sunset window: The exemption only applies to purchases made within the window described (after March 31, 2026 and before January 1, 2028).

Relationship to Existing Law

• This bill adds a targeted, temporary exemption and refund process within the state’s sales tax framework (Minnesota Statutes chapter 297A) for a specific infrastructure project. It uses the standard refund processes (297A.62 and 297A.75) to implement the exemption and requires general fund appropriations to cover the refunds.

Significant Changes to Law

• Establishes a new, project-specific sales tax exemption with a formal refund process.
• Creates a dedicated appropriation mechanism to fund the refunds from the general fund via the commissioner of revenue.

Relevant Terms - sales and use tax exemption - refundable exemption - construction materials and supplies - equipment - TH 6180th Street Rehabilitation Project - Highway 61 - Ideal Avenue South - Cottage Grove - Minnesota Statutes chapter 297A - 297A.62 - 297A.75 - general fund - commissioner of revenue - appropriation - refund process - infrastructure project - clean water infrastructure