House Omnibus Tax Proposal Would Extend Local Sales Tax Moratorium

The moratorium on creating or modifying local sales taxes would be extended to June 30, 2026.

The House omnibus tax bill, HF 2437, includes a provision that would extend the current moratorium on cities submitting new or modified local sales tax proposals to the Legislature. The proposal also would establish a task force comprised of four senators and four representatives to further study local sales taxes. If enacted, the extension would prevent cities from advancing proposals for the next two-year biennium.

League response

The League will testify on this provision in the House Taxes Committee during the week of May 5 and has submitted a letter in opposition. The Senate is expected to release its tax bill during the week of May 5.

Background

In 2023, the Legislature established a task force to review and make recommendations on local taxes. The task force submitted recommendations (pdf) to the Legislature in 2024, many of which are reflected in the House tax bill, sponsored by committee co-chairs Rep. Greg Davids (R- Preston) and Rep. Aisha Gomez (DFL-Minneapolis).

Under current law, cities may seek voter approval to impose a local sales tax — up to 0.5% — to fund regional projects such as libraries, public safety facilities, parks and trials, community centers, and athletic complexes.

The League supports modernizing and streamlining the local sales tax process by allowing cities general authority to bring proposals directly to voters without requiring a special law from the Legislature.

Earlier this session, the Senate Taxes Committee heard SF 375, (Sen. Ann Rest, DFL-New Hope), a bill that is modeled after the task force recommendations.  

Your next step

Contact your legislator to share your concerns about the proposed extension of the local sales tax moratorium.  

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