U of M Analysis of a Local Option Sales Tax in Monticello

In February, the City of Monticello engaged the University of Minnesota Extension Center for Community Vitality to analyze the potential impact of a Local Option Sales Tax in our community. Specifically, we were seeking data estimating the contributions of residents and non-residents. On Monday, April 24 those results were presented to the City Council.

The results of their analysis help explain why the City of Monticello is considering a Local Option Sales Tax. Using per capita sales in Minnesota, the Monticello population, and the index of income in their methodology, they estimate 31.4% of revenue for the local option sales tax would come from residents, while 68.6% would come from non-residents. 

This equates to about $30.41 per resident each year while the City of Monticello would receive an estimated $1.4 million per year to help fund the Bertram Regional Athletic Park and The Pointes at Cedar Recreation Area.

The U of M's full report, as well as highlights from the report are available on our website.

What would the Local Option Sales Tax be used for?

The funds raised by a Local Option Sales Tax must be used for projects valuable to the greater region. Monticello has identified two large-scale projects with regional significance: Bertram Chain of Lakes Regional Athletic Park and The Pointes at Cedar Recreation Area.

Bertram Chain of Lakes Regional Athletic Park is already a regional destination for recreation. The initial phases of construction created space for regional regular season and tournament play, bringing teams to Monticello from across the state.

The Pointes at Cedar is a more recent project. It’s intended to mix residential, commercial, and recreational spaces within a 100-acre development area. The project is anchored by a large central lake surrounded by pathways, art, and entertainment that will add a unique flair to the center of the community.

The City Council is committed to phased development of both projects, but a sales tax would be a transformational funding opportunity. It would create a specific source to finance future phases of the projects to ensure they can continue to develop for public use. To learn more about each project and why we believe they are regionally significant to our area, visit our website.

The approved City Council resolution from January 23, 2023 outlines a half (½) cent sales tax that would be in place for a maximum of 20 years. This would generate $30 million that would be split evenly to fund $15 million for each project. State law requires the tax to automatically sunset once funds authorized for the projects are collected, or the proposed 20 years (pending approved legislation), whichever occurs first. Local option sales taxes apply to the same items and services as the general state sales tax.

 When I'm running errands or grocery shopping what would I be taxed on?

You WOULD NOT be taxed on:

• groceries/food
• baby products
• prescription/nonprescription medication
• clothing
• water
• certain agriculture purchases such as poultry feed
• Vehicle sales/purchases, vehicle maintenance labor costs

You WOULD be taxed on:

• soft drinks: pop, coffee, tea drinks that contain sweeteners
• candy
• dining out/take-out orders
• vending machine sales
• tobacco products (except cigarettes)
• building materials
• Vehicle leases/rentals, vehicle parts
• Vehicle washing/cleaning services
• Pet grooming/boarding
• Pay television services (Cable/Satellite)

To view a full list of non-taxable and taxable items, visit: www.revenue.state.mn.us/guide/nontaxable-sales