SF4188

Purpose

• Authorizes the Cloquet Area Fire District to impose a local sales and use tax to fund a specific capital project and related costs, contingent on voter approval in the affected cities.

Key Provisions

• Tax authorization and limits

  • The Cloquet Area Fire District may impose by majority vote a sales and use tax of up to one-half of one percent (0.5%), for the purposes described in the bill, if approved by voters under Minnesota Statutes section 297A.99, subdivision 3.
  • The tax applies only in the city or cities where voters approve it; separate elections are required in the city of Cloquet and the city of Scanlon.
  • The tax is in addition to any other local sales and use taxes allowed by law.

• Administration and remittance

  • The tax proceeds are administered under Minnesota Statutes section 297A.99 and must be remitted by the commissioner of revenue to the Cloquet Area Fire District, after refunds and a proportionate share of collection costs, with the exact split depending on which city or cities approved the tax.

• Use of revenues

  • Revenues from the tax must be used to cover the costs of collecting and administering the tax and to finance a project: the construction of Ambulance and Fire Station I for the district.
  • The district may also use the funds to secure and pay debt service on bonds issued to finance all or part of the project.

• Bonding authority

  • The district may issue bonds under Minnesota Statutes chapter 475 to finance all or part of the project, with a principal limit of up to $31,000,000 plus bond issuance costs.
  • Bonds may be paid from or secured by any funds available to the district, including the tax revenue.
  • Bond issuance is not subject to certain debt limitations in existing law (e.g., no inclusion in typical debt limits; the issuance is not subject to Minn. Stat. sections 275.60 and 275.61).
  • A separate election to approve the bonds under Minn. Stat. section 475.58 is not required.

• Termination and remaining funds

  • The tax expires at the earlier of 20 years after it is first imposed or when the district determines that the amount received is sufficient to pay the project costs plus the costs of issuing bonds.
  • Any funds remaining after paying eligible costs must be placed in the district’s general fund.
  • The tax may end earlier if the district governing body decides to terminate it, and it remains subject to certain statutory provisions (297A.99, subdivision 12).

Significant Changes to Existing Law

• Establishes a new, district-level local sales tax authority for the Cloquet Area Fire District that is activated only with voter approval in the affected cities.
• Creates a dedicated funding stream (up to 0.5% tax) specifically for the construction of Ambulance and Fire Station I and for debt service tied to bonds.
• Allows up to $31,000,000 in bonded debt without being subject to some existing debt limits and without a separate bond election, while requiring voter approval for the tax itself and for the project as governed by 297A.99 and 475.58.
• Requires remittance of tax proceeds to the district and makes funding contingent on political subdivisions (Cloquet and Scanlon) authorizing the tax.

Potential Impacts (Plain Language)

• Residents and businesses in Cloquet and Scanlon could see a new local tax if voters approve it.
• The district gains a dedicated funding source to build and finance an Ambulance and Fire Station I and to cover bond debt service.
• The funding mechanism is designed to bypass some traditional debt limits, but it is contingent on voter approval and has a defined 20-year or project-completion termination point.
• Any remaining funds after project costs would go to the fire district’s general fund.

Process and Oversight Details (Selected)

• Voters must approve the tax under the cited statutes (297A.99, subdivision 3) with separate elections in Cloquet and Scanlon.
• Revenues are administered by the state Department of Revenue (via remittance to the district) with standard refunds and collection costs deducted.
• Bond issuance and project financing must follow the described statutory framework, with explicit limits and conditions described above.

Relevant Terms - Cloquet Area Fire District - local sales tax - sales and use tax - 0.5% (one-half of one percent) - Ambulance and Fire Station I - construction and debt service - bonds - Minnesota Statutes section 297A.99 - subdivision 3 - Minnesota Statutes chapter 475 - 31,000,000 (thirty-one million) - bond issuance costs - 275.60 and 275.61 - commissioner of revenue - remits proceeds - Scanlon - Cloquet - termination - 20 years - 297A.99 subdivision 12 - separate elections - 475.58