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1. What is a local option sales tax?

A local option sales tax (L.O.S.T.) is simply a sales tax that is collected within the geographic boundaries of a city or county. Local option sales taxes apply to the same items and services as the general state sales tax. Items exempt from regular state sales tax are also exempt from the local option sales tax including many essential items such as groceries, prescription and over-the-counter medications, baby products and clothing.  Complete list of non-taxable items from Minnesota Department of Revenue.

2. What can receipt of local option sales tax funds be used for?

Local governments in Minnesota use the local option sales tax to fund capital projects such as public buildings, libraries, parks, and other amenities.

3. Can any city create a local option sales tax?

Yes and no. Cities can explore creating and collecting L.O.S.T. but the process to do so is defined by state law. Before L.O.S.T. can be collected, it must receive approval from the state legislature, the local governing body (i.e. the City Council or County Board of Commissioners), AND the voters via a ballot referendum. 

4. What does Monticello want to fund using a sales tax?

Monticello’s City Council has identified two large-scale projects that they feel have a regional significance to our area: The Pointes at Cedar, and the Bertram Chain of Lakes Regional Park and Athletic Complex. The City has identified the local option sales tax as a way to alleviate the financial costs on local taxpayers and utilize the many visitors we have engaging, shopping and recreating within our community.

5. How much would the local option sales tax be and how long would it be in effect?

The proposed L.O.S.T would be one-half of one percent (0.5%), or $.50 on every $100 of taxable purchases for 20 years. This would generate an estimated $30 million in funding. State law requires the tax to automatically sunset once funds required for the projects are collected, or the proposed 20 years (pending approved legislation), whichever occurs first.

6. What happens if the local option sales tax is not supported by voters?

Both projects are already included in The Monticello 2040 Community Vision + Comprehensive Plan, and are included in the City's annual budgeting process. If the voters do not support the local option sales tax, City Council will continue to plan and budget for the two proposed projects utilizing the City's existing financial resources.

7. What is the estimated timeline for the local option sales tax?

The L.O.S.T. will be considered by the State Legislature during its session in 2023. If approved, the City Council would adopt a resolution accepting the new law, and there will be questions on the ballot, one for each proposed project, at the next general election of the city, which is in November 2024. If approved by the voters, the City Council would pass an ordinance imposing the tax and notify the Minnesota Department of Revenue at least 90 days prior to the calendar quarter in which the tax will begin to be collected.