St. Paul City Council considers 1% sales tax hike

A resolution will be introduced Wednesday before the St. Paul City Council which proposes a 1% increase in the sales tax option to help raise money for street repairs, affordable housing and pre-kindergarten education.

St. Paul City Council member Jane Prince is one of four council members pushing for the 1% hike in order to bridge what she calls a "funding gap" from the state legislature for critical needs in the city.

"We cannot keep up with our street repairs, and we have a big problem with teen homelessness," Prince said. "And early childhood education for 3 and 4-year-olds is the best economic development investment you can make."

Prince said the city is tapped out on property tax increases and a 1% boost in the sales tax would generate about $36 million every year to help keep St. Paul "prosperous and vital."

"Major cities like St. Paul, and even Minneapolis, are pricing people out of their cities," Prince said. "The people who work in these big cities are the same people who cannot afford to live in those cities."

St. Paul Area Chamber of Commerce CEO B Kyle issued a written statement to KSTP and cautioned against moving too quickly without more discussion and input from the business community.

Kyle's statement laid out the chamber's concerns:

"The last time we did a ½ cent sales tax, in the early 1990s for the Civic Center, we spent a year and engaged business, the chamber, elected officials, and residents in thoughtful discussions on the impact it would have. The Chamber is willing to participate again if we’re asked, with a timetable that makes sense. We feel strongly that anything that is proposed must engage our members — large and small — and right now it’s too early to know.

"It still needs a lot of work, and would require the support of the Governor and a divided legislature – all of whom would have lots of questions.

"Finally, if the City Council is to be successful in adding a sales tax, we should be looking at reducing property taxes. This can’t be just another addition."

If the city council passes the resolution, the proposed sales tax hike would still need approval from the Legislature and it would then go to St. Paul voters in the form of a ballot referendum which the earliest any of this could happen would be the fall 2020 elections.