Agenda - Council Work Session - 06/12/2012

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Levy Limitations — A 2008 law limited general operating property tax levy increases for cities with populations over 2,500 to an inflationary increase based on the state determined implicit price deflator (IPD) to a maximum of 3.9 percent annually for the next three calendar years. Modifications were made in subsequent legislative sessions to allow cities subject to levy limitation to declare "special levies" to replace the LGA and MVHC losses. The 2010 Legislature also established a floor of zero percent for the inflationary increase, so levies would not be reduced in the event of IPD deflation. The 2011 Legislature passed an omnibus tax bill during the regular session that would have extended levy limits for two years (taxes payable in 2012 and 2013). However, this was among the bills vetoed by the Governor, and the final omnibus tax bill passed in the special session did not address levy limits Sales and Use Taxes — A number of changes and clarifications were made to Minnesota sales and use tax provisions, including: • Made water used directly for public safety purposes (fighting fires) exempt from sales tax. • Expanded the sales tax exemption for the lease of motor vehicles used as ambulances to the lease of vehicles used for emergency response. • Added townships to the list of entities exempt from sales tax. • Provided an exemption from sales tax for technology and electricity for qualifying large data centers as a business incentive. • Clarified the sales tax regulations for online hotel sales. "Buy American" Provision Repealed — The "Buy American" provision, enacted in 2010, which prohibited public employers from purchasing or requiring employees to purchase any uniforms, safety equipment, or protective accessories not manufactured in the United States, was repealed. Cities may continue to purchase American-made uniforms and equipment, but they are not required to do so. Prohibition of Referendum Spending — Political subdivisions, including cities, are prohibited from expending funds to promote a referendum to support imposing a local option sales tax. The political subdivision may only expend funds to conduct the referendum. Tax Exempt Period for Economic Development Property — The maximum allowable holding period for property held by a political subdivision for economic development to be exempt from property taxes was increased from eight years to nine years. Concurrent Detachment of Parcels — State law for the concurrent detachment of property from one city to another has been changed. In the past, both cities involved had to support the change for it to be considered. Now, if the property owner and one of the involved cities petition for the detachment, the proposed boundary adjustment qualifies for consideration. Civil Immunity for Donated Public Safety Equipment — Immunity from civil tort claims is extended to municipalities that donate public safety equipment to another municipality, unless the claim is a direct result of fraud or intentional misrepresentation. The statute defines "public safety equipment" as vehicles and equipment used in firefighter, ambulance and emergency medical treatment services, rescue, and hazardous material response.