Light rail sales tax exemption

Hope dimmed for supporters of the Central Corridor Light Rail Transit project after the governor deleted state funding from the bonding law earlier this session. But some lawmakers want the project to keep chugging along, and one attempt would exempt construction materials from the state sales taxes.

HF3395, sponsored by Rep. Tom Tillberry (DFL-Fridley), would allow the sales tax exemption for the Central Corridor, proposed to run between Minneapolis and St. Paul, and the Northstar Corridor Rail line, which will run between Minneapolis and Big Lake.

The exemption would cost nearly $9 million between 2009 and 2011, according to a Department of Revenue analysis. Currently, the Hiawatha Light Rail Transit line and Metro Transit buses are granted the sales tax exemption. Tillberry said the state should extend the same tax policy to every mass transit project.

“I think that the way the policy is set up, that this is something that should be included in whatever we come up with,” Tillberry said.

Rep. Chris DeLaForest (R-Andover) said taxpayers should not be asked to keep the project viable, especially in a deficit year.

On April 28, the bill was incorporated into the omnibus tax bill, HF3149, sponsored by House Taxes Committee Chairwoman Rep. Ann Lenczewski (DFL-Bloomington). The bill awaits action by the House. The provision is also included in the Senate tax bill, SF2869, sponsored by Sen. Tom Bakk (DFL-Cook). That bill was passed by the Senate on April 3.