Law lets municipalities seek voter approval for a local project tax

A municipality may impose a local tax on gross receipts. The tax applies within the municipality seeking voter approval. The rate may not exceed 1% and must follow state gross receipts tax rules, except for the rate. The governing body must state the tax’s purpose and minimum amount in an ordinance, and the capital improvement board must approve it. The tax may be imposed only if at least 60% of voters voting on the question support it. After board approval, the governing body must put the question to voters at the municipality’s next regular or special election.

A municipality must put the tax proceeds into a special capital outlay fund and use them only for allowed projects. These limits apply to all tax proceeds distributed to the municipality. The fund may pay to buy or lease real property or equipment, or to build, repair, or renovate property owned by the municipality alone or jointly with another state local government. After a project is complete, the municipality may transfer project property, facilities, or equipment to a county or school district that includes part of the municipality.

A municipality must appoint a five-member capital improvement board to approve or reject tax ordinances. The board reviews ordinances for the local tax described in this law. The mayor appoints the members, and the municipality’s governing body approves them. The board has one governing-body member and four municipal residents who are not governing-body members. Each term lasts three years; a replacement may serve the rest of a vacant term. Terms last three years and begin on the first January 1 or July 1 after appointment, whichever comes first.

A municipality must end the tax under the law’s time and collection limits. These limits apply to the local tax and its ordinance. The ordinance and any affected tax rate remain effective until the last day of a calendar quarter at least 90 days after the municipality notifies the secretary of revenue. That end date must also fall by the earlier limit: 60 months after the ordinance is enacted, or June 30 or December 31 of the year the municipality collects the minimum amount specified in the ordinance. A municipality may not impose this tax if it collected proceeds from this tax in the most recent 24 months. The end date is the last day of a calendar quarter at least 90 days after notice, subject to the earlier 60-month or collection-goal limit.