The T Word: County-option tax levy proposal doesn’t have backing of Minnesota counties

To hear Rep. Paul Marquart (DFL-Dilworth) (pictured) tell it, his proposal to establish an optional county-level sales tax authority would solve a lot of Minnesota counties’ fiscal woes in a single stroke–replacing cuts to county program aid, reducing upward pressure on property taxes, and broadening counties’ tax base.

But the counties are not exactly rushing to get on board. Jim Mulder, the executive director of the Association of Minnesota Counties (AMC), tells PIM his organization is far from sold on the idea that letting counties levy up to one-half of 1 percent in sales taxes. "To be honest," says Mulder, "we’re not very comfortable with it at this point. We’re not exactly sure what all the unintended consequences could be. We’re also concerned that it’s just a backdoor way to increase state taxes, but put us in the position to have to do it.

"We’re more than willing to continue to look at it over the next month, but at this point we’re withholding our support or opposition, although a number of individual members [counties] are very opposed to it."

Though the proposal ostensibly makes county sales taxes optional, he argues, the practical logic of the idea is that "to replace aid we’ve gotten before, they’re going to have us levy taxes in order to be able the same amount as we’ve previously gotten in aid."

As for possibly unintended consequences, Mulder adds, "There are all sorts of nuances involving taxes already levied at the city level. Hennepin County, for example, is very opposed to it. Part of the issue is the environment there of already having put in a tax for the stadium. A lot of legislators beat them up pretty badly for that. Now [Marquart's plan] is setting up another environment where they have to through another [county sales tax levy] process."

An alternative proposal is being discussed around AMC, and may yet be pitched at the Legislature: Eliminate the requirement that counties pay sales tax on the purchases they make. As one staffer puts it, "We’d get about $100 million a year in county program aid under this plan. We pay about $85 million in sales tax to the states each year. Why not eliminate the middle man and exempt counties from having to pay sales tax on things they buy?"