HF4361 (Legislative Session 94 (2025-2026))
Minneapolis; local sales tax use of revenue modified, and downtown taxing area modified.
AI Generated Summary
Purpose
- Change how revenue from the Minneapolis local sales tax (including the downtown taxing area) is used, with a new framework to fund state bond debt service and to support the Minnesota Sports Facilities Authority (MSFA) over a multi-decade period (2021–2046).
Main Provisions
- General fund deposits for debt service: The commissioner must deposit amounts into the general fund to support state bond debt service, aiming for a present-value total of $150,000,000 by December 31, 2046. The present-value calculations depend on bond sale dates, discount rates, and true interest cost, coordinated with the commissioner of management and budget.
- Annual funding linked to MSFA needs: For 2021–2046, annual deposits to the general fund are set to match the state payments made for MSFA capital improvements (per Minnesota Statutes 473J.13, subdivision 4) and MSFA operating expenses (per subdivision 2).
- Tax-increase deposits for MSFA: Beginning in 2013 (through 2046), there must be proportionate periodic deposits to the general fund capturing increases in taxes dedicated to MSFA. These deposits are capped at $2,300,000 per year and calculated using one of two methods, whichever yields the lesser amount:
- Method i: A portion of the difference between current net annual MSFA-related taxes and a baseline (net taxes in 2011 plus inflation, per year since 2011), with two sub-options to compute that difference.
- Method ii: A portion based on a percentage (with a specific 3% option) of the prior year’s net taxes.
- Defeasance adjustment: If MSFA bonds are defeased, redeemed, or paid, the management budget and city finance officers must agree to a revised schedule using a zero-percent discount rate, while keeping the overall methodology consistent with prior practice.
- Use of funds for MSFA: Amounts deposited under these provisions must be used by the MSFA for stadium capital repairs, replacements, improvements, and stadium infrastructure.
Changes to Existing Law
- Section amended: Minnesota Statutes 2024, section 297A.994, subdivision 4 (and related references to Laws 1986 chapter 400, section 44).
- Overall effect: Adds a long-term mechanism to divert and then repurpose local sales tax revenue in Minneapolis toward state debt service and MSFA-related capital/operating costs, with explicit present-value targets, annual deposit schedules, and coordination with state and city budget authorities.
- Relationship to MSFA funding: Ties local tax revenue to state payments for MSFA-related capital and operating expenses, effectively embedding MSFA funding within a broader debt-service framework.
- Calculation framework: Establishes a defined method to calculate and adjust deposits based on bond terms (discount rate, true interest cost) and requires formal certification of annual schedules.
Practical Impacts
- Local tax revenue that previously supported other uses may be redirected to fund debt service and MSFA costs over a multi-decade period.
- MSFA funding becomes more predictable over time, with explicit annual amounts tied to state payments and a present-value goal.
- The city and state must coordinate closely on budgeting, bond issuance, and potential schedule revisions if bonds are defeased.
Relevant Terms - general fund - state bond debt service - present value - discount rate - true interest cost - bonds - Minnesota Sports Facilities Authority (MSFA) - capital improvements / capital repairs / infrastructure - operating expenses - capital improvement reserve - Minnesota Statutes 2024 section 297A.994 subdivision 4 - Minnesota Statutes 473J.13 subdivisions 2 and 4 - local sales tax / Minneapolis downtown taxing area - commissioner of management and budget - finance officer of the city - defeased bonds - zero percent discount rate - baseline net taxes (2011) and inflation adjustments
Bill text versions
- Introduction PDF PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 16, 2026 | House | Action | Introduction and first reading, referred to | Taxes |
Citations
[
{
"analysis": {
"added": [
"Introduces a present-value target (aggregate $150,000,000) to be deposited to the general fund by December 31, 2046, for state bond debt service support.",
"Requires a calculation framework based on bond sales under Minnesota Statutes 2022, §16A.965, or equivalent bonds if applicable.",
"Creates a schedule of annual deposit amounts through 2046, to be certified by the commissioner of management and budget and the city finance officer.",
"Incorporates deposits to support the Minnesota Sports Facilities Authority (MSFA) capital improvements and operating expenses under §473J.13."
],
"removed": [],
"summary": "This bill amends Minnesota Statutes 2024, section 297A.994, subdivision 4, to modify general fund allocations related to state bond debt service and to establish a schedule through 2046 for deposits intended to achieve a present-value target for the general fund. It ties present-value calculations to bonds sold under §16A.965 and to deposits into the construction fund, and it directs certification of annual funding schedules by the state budget office and the city finance officer. The section also interplays with additional deposits for the Minnesota Sports Facilities Authority (MSFA) capital needs under §473J.13 and contemplates complex tax-related deposits linked to special-law revenue for the MSFA through 2046. Additionally, the MSFA is required to use available deposits for stadium capital repairs, replacements, and improvements.",
"modified": [
"Amends Subd.4 to implement new general-fund deposit and present-value requirements, and to align with bond-issuance practices and MSFA funding mechanisms."
]
},
"citation": "297A.994",
"subdivision": "4"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Statutes 2022, section 16A.965, as the basis for determining the true interest cost of bonds whose proceeds or related calculations feed into the present-value deposit framework in §297A.994, subdivision 4. It also contemplates using an equivalent 30-year bond index as determined by the commissioner of management and budget.",
"modified": []
},
"citation": "16A.965",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Statutes, section 473J.13, subdivision 4, to establish the annual amount paid by the state for the capital improvement reserve appropriation to the Minnesota Sports Facilities Authority (MSFA). This amount is used to determine deposits into the general fund under §297A.994, Subd.4 for capital repairs, replacements, and improvements to the stadium and associated infrastructure.",
"modified": []
},
"citation": "473J.13",
"subdivision": "4"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Statutes, section 473J.13, subdivision 2, to establish the annual amount paid by the state for the MSFA operating expenses. This figure is incorporated into the general-fund deposit framework under §297A.994, Subd.4 as part of the operating-expense funding considerations for MSFA.",
"modified": []
},
"citation": "473J.13",
"subdivision": "2"
}
]Progress through the legislative process
In Committee