Sales tax distribution for SV
now up to Rochester council
Wednesday, May 29, 2013 3:23 AM
The Minnesota Legislature left most of the language in the distribution of $5 million of the Rochester sales tax option to surrounding communities, including Spring Valley and Chatfield, except that it now requires approval by the Rochester City Council by Sept. 1.
Spring Valley was targeted to have $265,423 available for economic development over the next two years when the state Legislature in 2012 approved Rochester's sales tax extension request with the condition that $5 million of the sales tax proceeds go to 17 area cities for economic development purposes.
However, in the most recent legislative session some area legislators tried to get four more cities added to the 17, which are mostly in Olmsted County. As discussion on the issue came up again, more possibilities were considered, including eliminating the proposal entirely.
In April, Rochester Rep. Tina Liebling said she would fight to take the money back and use it toward Mayo Clinic's Destination Medical Center initiative.
Local Rep. Greg Davids argued that the state can't go in and reverse the decision of the voters. The half-cent sales tax option went before the voters in Rochester last fall. The proposal, which included the language regarding the distribution to surrounding communities, was approved by 65 percent of the voters.
The final language in the file approved by the Legislature states that the Rochester City Council must hold a public hearing and that if the city doesn't pass a resolution by Sept. 1, the $5 million designated for the 17 cities will instead be used for public infrastructure projects under the Destination Medical Center Authority that is being set up as a result of action at the Legislature this session.
One Rochester City Council member has expressed opposition to the distribution of Rochester sales tax money to the surrounding towns when the city of Stewartville proposed using the funds for housing incentives. The others at the time supported the arrangement, saying that the voters approved the measure and people in outlying communities contribute to the sales tax by shopping in Rochester.
They agreed with Davids, who told the Tribune at the time, "I really feel we have to work as a team here. Since 60 percent of the people outside the city are paying this, they should see some benefit."
In the past, Davids had opposed the sales tax option, but as chairman of the House Taxes Committee in 2012, he made sure the benefits of the sales tax extended to the region and then threw his support behind it. The first sales tax was approved in 1983 as a way to pay for the city's portion of a federal flood control project that came about as a result of a 1978 flood that killed five people and caused millions of dollars in damage. The tax was reauthorized in 1990, 1998 and 2005 for various other Rochester community projects.
The Rochester City Council had approved the parameters of the distribution to outlying communities this spring. Local officials had also met with Rochester officials several times as everything seemed to be in place to move forward.
Now, they will have to wait until Rochester's council takes action on this proposal. Although the dissemination of funds had widespread support earlier among city staff and the majority of councilors, Rochester will be asked to contribute more than planned to the Destination Medical Center initiative.
In the final minutes of the session last week, the Legislature approved a tax bill with more than $400 million to support Mayo Clinic's $3.5 billion 20-year expansion plans. As part of the package, the city of Rochester is expected to contribute $128 million toward the project.