The Free Press, Mankato, MN

St. Peter news

December 20, 2013

Sales tax change helps local property taxpayers

(Continued)

He said, for example, the city won't be buying many police squad cars for a while because they bought several the past couple of years.

"Our capital improvement and equipment dollars will go further because we're not paying sales taxes on those big purchases."

He said the city was planning to buy a road grader and street sweeper this year but is holding off until after the first of the year to get the benefit of not paying sales taxes on the equipment.

Having local governments use local tax money to pay state taxes was an idea that came about in the 1992 budget crunch. Lawmakers offered to avoid deep cuts to local government aid programs in exchange for making their purchases taxable. Local leaders figured it would be temporary but it's stuck around.

"It was a classic example of how we would pay the state taxes only to assess local property taxes. But I understand it. Budget struggles make odd situations," Meyer said.

The state's 87 counties and more than 850 cities paid an estimated $54 million in sales taxes last year.

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