The cost of fun: Minnesota cities propose sales tax hikes to cover new parks and rec centers
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Chanhassen's planned Bluffs Community Center could include basketball courts, indoor fields and a walking track. Rendering courtesy of the City of Chanhassen
A half-dozen Twin Cities suburbs are asking voters to approve sales tax hikes this November to pay for new and improved community centers and parks.
Why it matters: Local leaders say their communities want more and better spaces to play, sweat and gather.
- But budget constraints and concerns about property tax levels have prompted them to seek alternative revenue sources.
State of play: Projects on local ballots range from a new state-of-the-art sports facility in Chanhassen with ice sheets, a field house and an indoor playground, to improvements to Stillwater's riverfront park.
- Others, like Brooklyn Center, have proposed upgrades to existing facilities.
Case in point: Richfield is pitching voters on a plan to renovate its 63-year-old community center to include a gym, an indoor walking track and underground parking.
- Mayor Mary Supple told Axios that residents expressed a desire for more indoor space where young people can "just be kids and have fun" during the winter months.
Yes, but: A need to replace aging roads and water mains meant the city "didn't have enough capital" to improve those recreational assets on its own, Supple said.
How it works: State law allows cities and counties to ask voters to raise local sales taxes to pay for infrastructure upgrades.
- The increases, which typically add a half-cent to a cent for every dollar spent, layer on top of the state rate of 6.875% and any other existing local sales taxes.
- While the tax proposals can raise tens of millions of dollars over a decade or longer, cities still often have to look to other sources, such as the state bonding bill or donations, to help cover the full bill.
The catch: The projects must have a regional benefit, because people from neighboring areas are also likely to pay the sales tax when they buy goods and services within city limits.
For example, Chanhassen officials backing a sales tax hike to fund the 300,000-square-foot Bluffs Community Center say one-third of the city's parks and recreation participants are from the surrounding community.
- The space could also host events like graduation for the local high school, where two-thirds of students are from neighboring towns, Mayor Elise Ryan told Axios.
- An analysis commissioned by the city estimates that about 45% of the sales taxes paid over the next 20 years would come from non-residents.
The other side: City leaders told Axios that some voters have questioned why more increases are needed when state lawmakers just approved a metro-wide sales tax hike last year. That increase was earmarked for transit and housing.
- Some critics also argue that sales taxes put too big a burden on lower-income people, even though essentials like food and clothing are exempt.
What we're watching: The Legislature, which has the power to decide which questions cities can put forward, has placed a moratorium on approving requests for future ballot measures through 2025.
- Lawmakers are expected to revisit the debate over the use of the ballot questions — and what projects meet the "regional impact" bar — as soon as next year.