The Best Value for Elk River Residents
Cost of the projects will be shared with non-residents
Sales Tax vs. Property Tax
Sales tax is a one-time tax, which is collected at the point of sale when people are purchasing in Elk River. This tax is collected from both residents and visitors to Elk River.
Property tax is an annual tax, which is based on the current value of the property of local homeowners and businesses. Only those that own or rent property within the city pay property taxes.
Why a sales tax
The city’s plan is to use low-interest bonds to pay for the improvements with a one-half of one percent sales tax (half-cent). The sales tax will pay bond payments to finance the $35 million investment and will expire when the low-interest bonds have been retired, which is currently projected to occur in 25 years.
Minnesota laws allow for local option sales and use taxes under specific conditions:
The City Council calls for a city-wide vote by referendum
Voters approve the referendum; and
The state legislature passes a bill setting the conditions for collecting the tax.
Minnesota Department of Revenue data shows that in 2015, Elk River had $388.7 million in taxable sales (excluding clothing, motor vehicles, services and food). A half-cent tax on the 2015 sales would be enough to pay the estimated annual bond payment.
Because Elk River functions as a regional center, our parks and facilities are frequently used by visitors to our community, 45 percent of sales taxes are paid by people who visit Elk River, according to research conducted by the University of Minnesota Extension Service.
The annual cost per resident would be $44.12 according to the University of Minnesota or $3.70 per month, 50-cents on a $100 taxable purchase.