MANKATO — Gov. Dayton’s proposed sales tax expansion could increase collections for Mankato and North Mankato, which have sales taxes that are collected on everything tagged by the statewide tax.
Whereas the statewide sales tax would decline from 6.875 percent to 5.5 percent under Dayton’s proposal, local sales taxes would stay the same — at one-half percent in the two cities.
The governor’s proposal extends the tax to a wide variety of services, such as accounting and membership fees.
The Associated Press has received an early estimate from the Minnesota Department of Revenue that shows local sales taxes could rise more than 60 percent. Statewide, that would mean an extra $139 million in 2014 for cities and counties.
Neither Mankato or North Mankato are taking it to the bank yet, though.
Mankato City Manager Pat Hentges said the city hasn’t estimated how much more sales tax money it could receive under Dayton’s proposal, calling it “speculation really at this point.”
“I think it’s a lot of wasted time to make those calculations until the discussion and study heats up at the Legislature,” he said.
Likewise, North Mankato hasn’t considered how Dayton’s proposal would affect its own sales tax.
But its situation is different than Mankato’s because its sales tax cannot exceed $6 million. Once that amount is reached, the tax ends.
So the proposal affects both cities differently.
North Mankato would simply pay off its sales tax more quickly.
However, Mankato’s sales tax, currently slated to expire in 2023, would collect a lot more revenue. But the city would continue to be limited to spending it on the civic center and its related amenities, Riverfront Park and the airport.
Earlier this year, Mankato’s City Council considered asking the Legislature to expand the use of the local sales tax but eventually decided to put that request off.
This article contains material from The Associated Press.