The Legislature having returned this week from a 10-day
Easter/Passover/Spring Break has hit the ground running. Prior to the break, the House completed their
work in the various finance committees. The House released their tax proposal and
bills with tourism related funding and policy provisions. The Senate returned this week and released
their tax proposal but also passed off the Senate Floor their budget bill
containing funding for Explore Minnesota Tourism. Listed below are the status
of the various proposals the Minnesota Association of Convention and Visitors
Bureaus has been working on this session.
The House and Senate both contain the following
modifications to existing local lodging taxes.
The House provisions are in House File 2125 which will pass off the
House Floor late Thursday evening. The
Senate provisions are included in Senate File 5 which will be on the Senate
Floor the week of April 29th.
We’ve identified where there are differences in the modifications.
- Minneapolis – HF 2125 eliminates the 13% cap on
local taxes, the Senate raises the cap to 13.875% both bills allow the city the
ability collect the local lodging taxes permitted under existing law. The Senate delays implementation to September
- St. Paul – Both the House and Senate allow the
local lodging tax to be increased from 3-4%.
- Two Harbors – Adjusts the cap.
The House and Senate both provide for the creation of new
local lodging taxes. The following
provisions are included in both the House and Senate proposals. We’ve noted where there are differences in
the House and Senate proposals.
- La Crescent Lodging Tax – Both the House and
Senate Tax Bills allow for a new tax up to 5%.
The House requires ½ of the tax be dedicated to the local chamber of
commerce and ½ dedicated to the La Crescent Event Center to promote local
tourism. The Senate bill requires the
city to follow the existing law on how the funds can be used.
- Lake County Lodging Tax – Establishes a CVB via
a 4% tax, 3% dedicated to supporting county marketing efforts and 1% dedicated
to county events and festivals. This tax
would be in addition to any tax imposed by a local unit of government. The provision would prohibit any new local
unit of government from imposing a new local lodging tax.
House File 2125 also includes the Plymouth Local Lodging
Tax, the Senate did not include this request in Senate File 5. The House Bill would allow the city of
Plymouth to impose an extra 3% local lodging tax for five years. Two thirds of the
revenue from this special tax must be used for capital improvements to public
facilities and marketing and promotion.
The balance of the funds must be used as required under existing law to
fund a local convention or tourism bureau.
Additional Items of
Concern: Labor Day School Start, Explore
MN funding, Collection of Lodging Tax from OTAs
- On Tuesday, as part of a broad coalition, we
were successful in deleting a provision from the House Omnibus Education Budget
Bill which would have allowed school districts to start prior to Labor Day for
the next two academic years. The House
amendment received broad bipartisan support with a vote margin of 93-38.
- On Tuesday, the Senate passed the Omnibus
Environment Finance Bill SF 2314. The
bill provides funding for Explore Minnesota Tourism. Prior to the legislative break, the Senate modified
the appropriation for Explore Minnesota Tourism to provide a $2 million
placeholder in the Grants Program. This
was accomplished by reducing the base budget but was necessary to keep the
grants program alive for the remainder of the 2019 Session.
- The House included in their Omnibus Tax Bill the
Minnesota Department of Revenues provisions related to accommodation
intermediaries. The House Bill would
require the local lodging tax to be imposed on the total consideration paid for
ancillary services, including those provided by accommodations
intermediaries. The provision also
allows for an accommodations intermediary to remit the tax annually and makes
clear the language does not intend to create a presumption regarding the definition
of lodging prior to the date of enactment.
The Senate Tax bill does not included these provisions.
The Legislature has three weeks remaining in the 2019
Legislative Session. All work must be
completed by May 20th.