4.3. SR 04-19-1999 - Laserfiche WebLink

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. including the Northstar Corridor. The study assumes that bonding will be used to pay for upfront investments over time and recommends that debt service be covered by general revenues. This source of financing recognizes the highly-regarded creditworthiness of the state in the capital markets and is consistent with how the state has funded major transportation system improvements in the past. The study also suggests that the revenues from the state sales tax could be used to supplement general funds for annual debt service on bonds. At the current rate of 6.5%, the sales tax yields over $3 billion annually. There are no statutory limitations on the use of the revenues and the tax base has been growing at approximately 6.5% annually for the last three years.9 The study also states that motor vehicle fuel taxes and registration fees are not available for funding commuter rail capital needs without explicit statutory authorization and a determination that cross-subsidizing rail transportation with highway-derived funding is permissible under the state constitution. This determination appears unlikely, however highway funds could be applied to certain components of the commuter rail projects, such as improvements at highway-railroad crossings. 10 Types of State of Minnesota and Local Funding General Sales and Use Tax Chapter 297 A. Minnesota Statutes . The sales tax is imposed on the gross receipts from taxable sales made by any person in Minnesota. The complementary use tax is imposed on the storage, use, distribution, or consumption in Minnesota of taxable personal property unless the Minnesota sales tax was paid on the sales price. The rate for both the sales tax and the use tax is 6.5%. An additional 2.5% tax is imposed on alcoholic beverages, both on-sale and off-sale, and an additional 6.2% tax is imposed on the rental of a car, van, or pickup truck for less than 29 days. Farm machinery and logging equipment are taxed at a rate of 2.5% instead of 6.5%. All revenues from the general sales and use tax go into the General Fund. The tax base for the general sales and use tax is defined as the gross receipts from the sale of tangible personal property or services to the final consumer. Exemptions to the sales tax are many and include food products, clothing and wearing apparel, drugs and medicines, prescription eyeglasses, resource recovery equipment, certain capital equipment and machinery purchases, and sales to religious, educational, and charitable organizations. . Net sales tax receipts (taxable portion of the gross receipts) are projected to reach $6.665 billion during the 1998-99 biennium. Net sales tax receipts for the 2000-01 biennium are expected to reach $7.322 billion, an increase of $656 million (9.8 percent) over the forecast for 1998-99 biennium. Biennium growth rates for consumer durables and business capital equipment, the two largest components of Minnesota's sales tax base were 10.2 percent and 10.9 percent respectively. (November Forecast (Nov 1998), Minnesota Department of Revenue (General Fund)) Northstar Commuter Rail Feasibility Study March 23, 1999 9-5 Financial Analysis