SF5251

Purpose

• Authorize Hennepin County to impose a local sales and use tax of up to 1% to fund specific public purposes in the county.

Main Provisions

• Tax authorization and rate

  • Hennepin County may impose a local sales and use tax of up to 1%.
  • The county can adjust the tax rate by resolution to raise enough revenue for the listed purposes.
  • The new tax is in addition to any other local taxes and is subject to existing law for administration and collection.

• Use of revenue (Subdivision 2)

  • First, money is distributed by resolution to:
  • Grants or direct funding to other governmental units and nonprofit organizations up to $4,000,000 annually, increased by up to 1.5% each year.
  • Purpose: to fund youth activities and youth and amateur sports in Hennepin County, and to extend library hours for Hennepin County libraries and Minneapolis public libraries.
  • After this distribution, remainder goes to the board of directors of an eligible health care facility in Hennepin County.
  • Eligible health care facility purposes (six items): 1) development, construction, improvement, and equipping of the facility 2) construction or renovation of public infrastructure to support the facility 3) accumulation of reserves for capital improvements 4) reimbursement of uncompensated care 5) payment of operating expenses 6) payment of costs to issue and finance bonds for the facility
  • Purpose of funds is to supplement, not replace, existing county expenditures.
  • By January 15, 2029, and every odd-numbered year thereafter, the county must report to the chairs and ranking minority members of the education policy and finance committees about how the funds were used.

• Bonding authority (Subdivision 3)

  • The county may issue bonds (and refund bonds) to finance the authorized costs.
  • Bonds can be limited obligations payable from taxes and other available revenues.
  • The county may pledge the full faith and credit and taxing power as security.
  • An election to approve bonds is not required.
  • Bonds are not counted toward the county’s debt limit.

• Administration, collection, and enforcement (Subdivision 4)

  • The tax follows the administration, collection, and enforcement rules of Minnesota Statutes, section 297A.99, subdivisions 4 and 6 to 12a.

Significant Changes to Existing Law

• Creates a new local sales tax authority for Hennepin County (up to 1%).
• Establishes a prioritized spending plan for the revenue, including:
  • Youth activities and youth/amateur sports
  • Library hours and library services
  • Funding for an eligible health care facility (with specific capital, operating, and infrastructure uses)
• Introduces a dedicated bond financing mechanism for the tax-funded projects with no required voter referendum and no impact on the county’s debt limit.
• Adds an annual/biannual reporting requirement to the state Legislature about how the funds are used.

Timeline and Reporting

• First reporting due by January 15, 2029.
• Subsequent reports by January 15 of each odd-numbered year.

Definitions

• Eligible health care facility: a nonstate government teaching hospital located in Hennepin County that has high medical assistance utilization and a Level 1 trauma center.

Administration References

• References to related statutes include Minnesota Statutes sections 477A.016, 297A.99, and 475.58.

Policy Intent (High-Level)

• Channel local revenue to youth services, library access, and health care facility capacity and infrastructure, with transparent reporting and a financing mechanism that avoids voter referenda.

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Relevant Terms - Hennepin County - local sales tax - sales and use tax - up to 1% - youth activities - youth and amateur sports - libraries and hours of operation - eligible health care facility - nonstate government teaching hospital - high medical assistance utilization - Level 1 trauma center - board of directors - development, construction, improvement, equipping - public infrastructure - reserves for capital improvements - uncompensated care - operating expenses - bonds / bond costs - issuance and financing of bonds - 475.58 (bond election provision) - 297A.99 (administration, collection, enforcement) - reporting to Legislature - debt limit (county)