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Stadium taxes still growing, now counted in Minneapolis' general fund

Posted by: Eric Roper Updated: August 27, 2013 - 6:27 PM

Recently released budget documents show that revenues from the sales taxes Minneapolis will dedicate to the Vikings stadium continue to grow, though not as fast as previous years.

Revenue from the city's local sales taxes is projected to jump about 2 percent in 2013, compared with 6.2 percent a year before, according to the mayor's proposed budget. That clashes a bit with this line in Mayor R.T. Rybak's budget speech earlier this month: 

"We estimated that these taxes would grow by 2% a year, but because of our rebounding economy, today those revenues are growing at more than double the projection," Rybak said. 

The stadium legislation includes a provision that ups the city's contribution when taxes increase, to an extent. Excess funds beyond that are retained by the city for economic development and other purposes. Rybak said in his speech that this has netted the city an extra $5 million so far.

The taxes in question are a .5 percent citywide sales tax, a 3 percent downtown restaurant tax, a 3 percent downtown liquor tax, and a 2.6 percent hotel tax. These taxes currently pay debt on the city's convention center, which is slated to be paid off in 2020.

Also noteworthy is that the fact that the city is now counting these taxes as part of the general fund, rather than as part of the convention center special revenue fund. The change piqued the interest of stadium opponent Gary Schiff, who noted that the city claimed these were state dollars to bypass the charter's referendum requirement.

Whether or not they are city resources is now moot, since the state stadium legislation explicitly overrode the city's charter requirements.

"When we wanted to spend them for say the Vikings stadium, we were given an analysis that they were not city dollars," Schiff said at a budget hearing Tuesday. "They were state sales taxes and thus were not under the city's control per the charter requirements. But now we're putting those numbers back on the books, it seems like, in a full accounting method that is much more transparent and honest." 

The city's chief financial officer, Kevin Carpenter, responded that the taxes were "always accounted for in our budget, it's just where." He noted that the legislation allowed the city to use the dollars for economic development purposes, which required them to be rerouted.

"The stadium legislation removed the strings that were attached to the local taxes and their uses," the mayor's office said in a statement. "As such, they become general government revenues that are, by necessity and accounting standards, accounted for in the City’s General Fund."

For what it's worth, during the stadium debate, one state lawmaker representing Minneapolis said those strings never existed.

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