Local Option Sales Tax

What is the Proposed Local Option Sales Tax?

The City of West St. Paul Local Option Sales Tax is a proposed funding source for West St. Paul Infrastructure. If adopted, the funding would be generated by implementing a one half of one percent sales tax on already taxable purchases made in the City of West St. Paul.

Why is the City Considering A Local Option Sales Tax?

Due to the Robert Street reconstruction project, the City of West St. Paul will be paying $1.84 million annually towards repayment of the debt for the next 15 years.  

As a result, the City will not have sufficient revenues to make necessary improvements to other local streets without increased revenue from another source. Without the Local Option Sales Tax, the City would likely either have to increase property taxes to pay for street improvements or would need to delay these improvements.

The proposed Local Option Sales tax would bring in an estimated $1.3 million in annual revenue.

How Much will this Cost Shoppers?

For each dollar spent on taxable goods and services in West St. Paul, the City will collect one-half of one percent.

LOST Penny Visual

What are the Pros and Cons of a Local Option Sales Tax?

While not a complete list, and opinions on the subject vary by individual, the following outlines some of the most commonly perceived advantages and disadvantages of implementing the proposed sales tax.

Advantages

  • May potentially limit increases in property taxes.
  • About 30% of funds are expected to come from outside West St. Paul by visiting consumers.
  • Funding to be used for roadway infrastructure improvements that may not otherwise occur in a timely manner.

Disadvantages

  • Increased cost to purchasers of taxable goods and services bought in West St. Paul.
  • Consumers may choose a location without a local option sales tax to make purchases, seek services or dine.
  • Perception that the cost impact to purchases is greater than it actually is.

What is the Process?

Before the City of West St. Paul can implement a Local Option Sales Tax, three approvals must first occur in order.

Step 1: Majority of West St. Paul voters vote in favor.
Step 2: Minnesota Legislature approves the tax.
Step 3: City Council adopts ordinance implementing sales tax.

When Will It Happen?

If the Local Option Sales Tax continues to move forward, key dates are listed below.
July 23, 2018 - West St. Paul City Council voted unanimously to include a Local Option Sales Tax question on the 2018 general election ballot.
November 6, 2018 - West St. Paul voters decide if the proposal moves forward.
Spring 2019 - MN State Legislators decide if the tax should be implemented.
January 1, 2020 - December 31, 2040 - .5% sales tax collected to fund City street and walkway projects.

How do I Vote on This?

Any eligible West St. Paul voter has the opportunity to vote on this single question issue. On the November 6th, 2018 midterm general election ballot, the following question will be asked:

Shall the City of West St. Paul, Minnesota, be authorized to impose a sales and use tax of one-half of one percent (0.5%) to finance street projects identified in the City’s Pavement Management Plan?
О Yes         О No

Only ballots with a Yes or No vote will count toward a majority. If the majority of voters choose “Yes”, the approval of the Minnesota State Legislator will be sought.

Do Other Cities in Minnesota have a Local Option Sales Tax?

Yes, at least 31 cities, groups of cities, and counties in the state have adopted a local sales tax. Of those, 29 have adopted a rate of .5% as proposed in West St. Paul, or higher. Two have a lower rate.

Cities similar in size to West St. Paul that have a Local Option Sales Tax in place include Sartell, North Mankato, Marshall, Owatonna, Hutchinson, Fergus Falls, Sauk Rapids, New Ulm, Albert Lea, Austin, Bemidji, Brainerd, Cloquet, Willmar, and Worthington, among others.

Larger communities include Minneapolis, St. Paul, Duluth, Rochester, Mankato, St. Cloud as well as Hennepin, Olmstead and Cook Counties.