The Mayo Clinic's Gonda Building in downtown Rochester.
Glen Stubbe, Star Tribune
Rochester’s city sales and property taxes are comparable to those in other major Minnesota cities. But unlike Minneapolis and Duluth, the city does not impose a food and beverage tax. Unlike Minneapolis, it has no entertainment tax, and at 4 percent, its lodging tax is lower than similar taxes in Minneapolis, St. Paul, Duluth, Bloomington and St. Cloud. In addition, Olmsted County imposes no sales tax for transit, as five metro counties do.
Minnesota House Research
Minnesota Legislature makes welcome progress on Mayo
- Article by: Star Tribune Editorial Board
- April 29, 2013 - 10:59 AM
While much remains to be decided by the 2013 Legislature, lawmakers appear close to an accord on one of the biggest items on their agenda.
The Legislature seems to have found a way to say yes to Mayo Clinic’s call for help in building what it calls a Destination Medical Center in Rochester.
Similarly structured provisions to help Rochester pay for the public infrastructure demands of a major Mayo expansion have landed in the House and Senate tax bills. The House bill won floor approval last week; the Senate bill is expected on the floor today. Barring an unforeseen hiccup, Gov. Mark Dayton and a tax conference committee should be able to reach an accord with Mayo and its local government partners before the Legislature adjourns on or before May 20.
Though the work isn’t done, it’s not too soon to applaud the team of legislators and staffers in both the executive and legislative branches, as well as officials from Rochester, Olmsted County and the clinic itself, who have brought Mayo’s proposal this far. The two Taxes Committee chairs, Sen. Rod Skoe and Rep. Ann Lenczewski, deserve particular credit. Instead of simply rejecting a less-than-optimal original bid from Mayo, they and their staffs worked long hours to develop a response more consistent with typical public-works financing in this state.
In their efforts to give a green light to a $6 billion, 35,000-job expansion of world-class medical facilities and the services that support their patients, lawmakers will have done more than strengthen the bond between Minnesota and its largest private employer. They also will have demonstrated that, contrary to critics’ repeated refrain, Minnesota is very much a probusiness state.
Mayo’s original request was to skim off $525 million over 20 years from all state tax receipts generated in downtown Rochester after a threshold level of investment had been made by Mayo and private developers. It also sought to use $60 million from the city’s recently renewed local option sales tax.
From that unprecedented approach, only the notion of a threshold private-investment trigger has survived. The two tax bills authorize a flow of state aid to commence when either $200 million (House bill) or $250 million (Senate bill) has been spent by Mayo on the project. The public aid package has these components:
• Up to $327 million in state “infrastructure aid,” to be dispensed in yearly increments based on a percentage of Mayo’s investment in the previous year, but not to exceed $30 million per year.
• A required city match for that state aid of up to $128 million, along with authority for the Rochester City Council to extend the life of its existing 0.5 percent sales tax and/or impose other local taxes. (See adjacent box for some possibilities.) A tax-increment financing district could also be established to capture property tax revenue for Destination Medical Center infrastructure needs.
• Up to $116 million in transit aid from state and local sources, including authorization for Olmsted County to impose a sales or wheelage tax to cover the local share.
• Construction materials used for infrastructure improvements (and maybe some private buildings, too) would be exempt from state sales taxes. Like the infrastructure aid, this form of support comes into play only when job-generating (and tax-producing) construction is underway.
If this response to Mayo’s request for infrastructure help sets a precedent for other big private projects around the state, it’s one key legislators in both parties say Minnesotans can live with.
Who will decide how and when state and local tax dollars will be spent for the Mayo project is among the matters yet to be resolved. Mayo wants to reserve at least veto power for itself in an anticipated Destination Medical Center public-private governing board. It also wants to assure that public dollars can blend easily with the philanthropic donations the clinic expects to direct to this project.
But Mayo must recognize that with taxpayer dollars come an expectation — and an obligation — for public oversight and accountability. The Capitol’s creative “Team Mayo” thus far has struck a good balance between prudent use of tax dollars and the opportunity that Mayo is offering Minnesota. That balance should guide the work that remains on a bill that could define this legislative session in state history.
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