Richfield explores local sales tax to fund regional amenities

Richfield explores local sales tax to fund regional amenities

Richfield, Minn. (October 7, 2022) – While Richfield once considered itself a ‘best kept secret’ in the south metro, it now boasts thousands of visitors each year to destinations throughout the city. Last week, the city council explored a way to capture those visitors, and their dollars, to help support the amenities that make Richfield such a wonderful place to live and visit.

At a September 27 work session, the council began discussions on using a local sales tax to help fund some of the community’s regionally significant recreation assets. Statewide, it is currently underway in 43 Minnesota cities, including the 4 cities that surround Richfield.

“We’re taking the first step to simply ask the legislature to give us the authority to go to our voters,” acknowledged City Manager, Katie Rodriguez. “It will allow residents to decide what projects they want to fund for the future.”

The work session covered the process, priorities and limitations of using a local sales tax for funding local amenities that have appeal beyond the borders of Richfield. The council must first agree to the initiative, and then a formal request must be made to the Minnesota State Legislature.

The request itself must be tied to specific capital projects with regional appeal. Council members explored possible infrastructure projects that are regionally significant, and directed staff to refine the list and schedule a future discussion. Many of the projects focused on the local parks system, including Wood Lake Nature Center, along with other local amenities that have a regional draw.

“Our park system needs major reinvestment to stay relevant and offer the best opportunities and wellness amenities for our community,” remarked Amy Markle, Recreation Services Director. “I do feel that careful financial planning now will help alleviate difficult decisions we could potentially have in the future.”

The use of sales taxes to fund these initiatives allows residents to share the tax burden with visitors to the community who are spending money on taxable goods in Richfield. A recent analysis from the University of Minnesota Extension office estimated that 54 percent of a local sales tax would be paid by visitors to Richfield.

Local sales taxes are generally set at 0.5 percent, sometimes called a “half cent tax,” and adds 5 cents of tax onto a $10 purchase. Estimates indicate that, if approved, the sales tax could generate $2.8 – $3.4 million per year for the approved projects. Once approved by voters, sales taxes are commonly in place for 15-30 years.

If the city council formalizes the initiative as a legislative priority, a formal request will be made to the State Legislature prior to the beginning of 2023 legislative session. If approved as part of the state tax bill, the request would move on to voters during the next General Election.

“This is not just updates to the facilities, but it’s about recreating and refreshing our most beloved community gathering spaces,” acknowledged Richfield mayor, Maria Regan Gonzalez. “The last time these places were developed, they weren’t necessarily focused on accessibility or inclusion. This time we have an opportunity to do things differently.”