Northeast legislator Loeffler says city already has control of sales taxes

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April 9, 2012 // UPDATED 2:10 pm - April 13, 2012
By: Nick Halter
Nick Halter
State Rep. Diane Loeffler of Northeast Minneapolis says there is a big hole in Mayor R.T. Rybak’s argument for using city sales taxes for a new Minnesota Vikings stadium, and the DFLer has been trying to spread the word.

Loeffler wrote a law in 2009 that is still on the books. That law (Ch. 88, article 4, section 12) says that the city already has control of about $60 million generated every year through a mix of citywide sales taxes and downtown hospitality taxes.

That law states that when the city isn’t using all of the roughly $60 million to pay for the Convention Center, it can be used for other city purposes, like infrastructure and housing.

“The city may use the excess revenue in any year to fund capital projects to further residential, cultural, commercial and economic development in both downtown Minneapolis and the Minneapolis neighborhood,” the law states.

Why does it matter?

Rybak has been telling residents at recent forums that the city needs a Vikings stadium deal in order to take control of that money. With that money, the city would be able to fund the Target Center through sales taxes, instead of from property taxes.

Loeffler, as well as City Council Member Gary Schiff (Ward 9), say that’s not true, and that the city could be using that money for other projects.

“I don’t think the mayor understands what’s currently in law, in that right now it is dedicated as a flexible revenue source,” Loeffler said. “Anything that is not needed for the Convention Center can be used just like it is in St. Paul — for redevelopment, revitalization efforts in downtown and the city neighborhoods.”

In recent years, the city has been sending all of the sales tax revenue to the Convention Center. The money is used to pay off debt, fund capital improvements on the building and to market the city through Meet Minneapolis.

But a big chunk of the sales tax revenue is going toward debt payments on the facility — $19 million in 2010. The city is scheduled to pay off the debt by 2021. Loeffler says that starting in 2021, the city could start diverting large chunks of money to revitalization efforts.

Loeffler is concerned that by promising that pot of money — which could top $2 billion over the next 30 years — to the Vikings, Target Center and the Convention Center, the city will be losing money that could be spent on other projects that an aging city needs.  

“If we’re going to commit our only flexible, growing with inflation revenue source for the next three decades, we really ought to know that it’s going to pay off better than if we could put that same $2 billion into revitalizing our Downtown and our neighborhoods and our infrastructure.”

City sales tax overview

The city collected $61.4 million in 2010 through a mixture of five taxes:

  1. A half-cent citywide sales tax ($27.3 million)
  2. A 3 percent entertainment tax ($13.2 million)
  3. A 3 percent downtown restaurant tax ($10.5 million)
  4. A 3 percent downtown liquor tax ($4.6 million)
  5. A 3 percent lodging tax ($5.8 million)

That money was sent to the Convention Center, which had an $84.9 million budget in 2010. Of that budget, $19 million went toward debt payments on the facility. The facility will be paid off in 2021.