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Cities Push for Local Sales Taxes as Lawmakers Weigh Dozens of Requests

April 27, 2026

The House and Senate taxes committees reviewed more than 35 proposals from cities and counties.

The local sales tax moratorium put in place under the 2023 tax law expired on May 30, 2025, allowing cities to bring proposals to the Legislature this year.

House and Senate taxes committees have since heard more than three dozen proposals from cities and counties seeking local sales taxes to fund capital projects in their communities.

Lawmakers debate equity and impact

During hearings, lawmakers questioned whether the proposals meet requirements for regional significance and align with guidelines in Minnesota Statutes 297A.99.

They also raised broader concerns about who pays local sales taxes and which communities are best positioned to benefit from them. Areas with strong retail tax bases may have an easier time funding projects, while others may struggle.

Many cities are pursuing local sales taxes to diversify revenue sources as local government aid has remained stagnate and costs continue to rise.

Hennepin County proposal draws focus

The highest-profile request comes from Hennepin County, which is seeking to increase its existing .15% sales tax to 1% to help fund Hennepin County Medical Center (HCMC).

The Senate has scaled back that proposal, amending it to raise the rate to .25%.

HCMC faces financial challenges, but lawmakers continue to debate whether funding should come from a regional sales tax or the state, given the hospital’s role as a statewide asset.

Next steps for taxes bill

Senate Taxes Committee Chair Sen. Ann Rest (DFL-New Hope) assigned Sen. Amanda Hemmingsen-Jaeger (DFL-Woodbury) and Sen. Carla Nelson (R-Rochester) with reviewing the local sales tax proposals and recommending which should be included in the Senate omnibus taxes bill.

With less than three weeks remaining in the session, both chambers are working to finalize their tax plans. The Senate is expected to release its taxes bill on April 29.

Read more news articles.

Your LMC Resource

Beth Johnston

Intergovernmental Relations Representative

(651) 281-1218

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