Dear Neighbor,
City of Aitkin officials recently presented a proposal to the House Property Tax Division asking to place the question of adding a 1 percent local option sales tax question before the voters of the city next fall.
The state law allows cities under certain situations to add up to a 1 percent of sales tax on all taxable items sold within the city. Each cities’ proposal is reviewed by both the House and Senate tax committees and may be included in a larger tax bill that must pass both bodies of the legislature and be signed by the governor.
Each of the local sales tax proposals that make it through the legislative process must then be submitted to residents of the city in the form of a voter referendum. If the voters pass the referendum, then the additional sales tax is included in all retail taxable goods and services sold within that city.
The Aitkin City Council is proposing to add a 1 percent local sales tax that would raise about $8.3 million dollars to be used to construct a new government facility and make about $1 million dollars of improvements to city parks and trails. The additional sales tax would be collected for up to 19 years or when the bonds funding the projects are paid for, whichever occurs first.
The city estimates the local sales tax will generate about $500,000 in annual tax revenue. The legislature usually passes an annual tax bill toward the end of each legislative session, which ends the 3rd week in May. If the proposal is included in this year’s final tax bill, then the city residents would be presented with the question on their November general election ballot
Minnesota’s statewide current general sales tax is 6.875 percent. Several cities in Crow Wing County have local option sales taxes in place. For example, in Brainerd and Baxter in addition to the 6.875 percent general state sales tax, a .5 percent city local option sales tax and a .5 percent Crow Wing County special transportation sales tax apply for a total sales tax rate of 7.875 percent.
If the city voters approve the 1 percent increase then the sales tax rate in Aitkin would be equal to the current 7.875 percent sales tax rate in Brainerd and Baxter.
Sincerely,
Dale