Omnibus Tax Bill Passes House, Senate Bill Released

Both bills include a limited general authorization for local sales taxes for certain projects.

On May 3, the House of Representatives passed its omnibus tax bill, HF 5247 (Rep. Aisha Gomez, DFL-Minneapolis), 68-60 off the floor. The Senate omnibus tax bill, SF 5234, (Sen. Ann Rest, DFL-New Hope) was released and passed out of committee on May 2. Its next stop will be a Senate floor vote before the two versions are reconciled in conference committee.

What’s in the House bill?

The bill would reduce general fund revenue by $53 million in fiscal years 2024-2025 and by $5.23 million in fiscal years 2026-2027. The omnibus bill includes numerous provisions the committee heard during the session that would impact cities. Those provisions include:

• A general authority for local governments to bring certain projects to voters for a referendum without requiring legislative approval.
• A fix to the local lodging tax to align locally administered lodging taxes with state administered lodging taxes, so that online travel companies pay the tax on the share that they retain from each booking.
• $1 million in one-time grants for cities for treating or removing trees infested with emerald ash borer. The Minnesota Department of Revenue would be the program facilitator and be required to use an open application process for a merit-based competitive grant program.
• A requirement that charitable organizations occupy and provide services from a property in order to receive an exemption on the property if it is used to provide rental housing.
• Replacing the sales tax on amusement devices with a gross receipts tax.

What’s in the Senate bill?

The Senate bill also includes numerous provisions heard during the committee process this session that would impact cities. Those provisions include:

• A general authority for local governments to bring certain projects to voters for a referendum without requiring legislative approval. The Senate version would not apply to library and park projects in the metro, though it does allow other projects like community centers and airports that are not eligible projects in the House bill. The League is generally supporting the Senate approach while still suggesting several changes, a number of which have been adopted into the bill.
• A one-time deposit of $3.252 million in fiscal year 2025 to the resource management account in the environmental fund.
• Creating a maintenance of effort requirement for recipients of local affordable housing aid based on the average of the three prior fiscal years of locally funded housing expenditures.

Next steps

Throughout the session, League staff has followed individual pieces of legislation that were included in the omnibus proposal. There are still significant differences in the local sales tax general authorization components of the House and Senate bills. The Senate has adopted changes suggested by other senators but, so far, the House has not. If you have questions or concerns about these changes, please contact League staff or consider reaching out to your state representative or senator.

View the League’s written testimony on the Senate bill (pdf).

Read more news articles.