2023 Sales Tax Proposal

1. What does a vote YES mean?

   A “YES” vote means the voter is supportive of imposing a one-percent local sales tax increase to fund improvements to Saint Paul roads and parks.

   If the proposed one-percent local sales tax is passed by Saint Paul voters, the revenue collected over 20 years will provide $738 million for road improvement and reconstruction projects throughout the city, including 24 arterial and collector roads, including some bridges, over 44 miles in each of the seven wards. The arterial and collector street system’s PCI will increase to an average of 70 (“satisfactory” condition) – an industry standard that governmental agencies strive to achieve.

   

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   If the proposed one-percent local sales tax is passed by Saint Paul voters, the revenue collected over 20 years will provide $246 million for improvements and upgrades Parks and Recreation facilities throughout the city. This investment would revitalize aging parks infrastructure with a focus on the worst-condition parks, community centers, trails, connections, and athletic facilities. Revenue would also fund:

   • A multipurpose community center on the city's East Side to serve a densely populated area and attract visitors from surrounding suburban cities
   • A 21st century versatile, dedicated multi-sport/multi-use athletic complex for hosting local and regional tournaments, leagues, activities, and other events and programs
   • A river focused environmental learning space and National Park Service headquarters at Crosby Farm Regional Park
   • A 1.5-mile River Balcony promenade along the downtown bluff, which will transform urban infrastructure into a public space that connects parks and civic landmarks.

2. What does a vote NO mean?

   A “NO” vote means the voter is not supportive of imposing a one-percent local sales tax increase to fund improvements to Saint Paul roads, bridges, and parks.

   If a the proposed one-percent sales tax is not passed by Saint Paul voters, these improvements would be funded by other local revenue sources, likely including property taxes and assessments. Until a stable source of funding can be determined, the PCI condition of city-owned arterial and collector streets is expected to drop from 49 to 29 (“very poor” condition) within the next 20 years.

   If a the proposed one-percent sales tax is not passed by Saint Paul voters, Saint Paul Parks and Recreation could accrue an estimated $150 million in unfunded liabilities and fall further behind in deferred maintenance, resulting in potential service gaps throughout the city.

Frequently Asked Questions

1. Why are you proposing a sales tax increase instead of another property tax increase?

   Funding the projects with a local sales tax will more closely distribute the costs of the projects to the users of the facilities, including people who work but do not live in Saint Paul, visitors who use lodging, attend events, conventions, and conferences, and patronize Saint Paul’s many dining and beverage establishments.

   Raising the equivalent amount of revenue through property taxes would require a 20% increase in the property tax levy, resulting in a $304 annual increase for a median value home. The owners of a median value home in Saint Paul would need to purchase more than $30,000 of taxable goods to experience the same annual tax impact through a sales tax.

   To continue to be consistent with the state, the proposed sales tax would not include food, clothing and other essential items.

2. How was the decision made to choose the streets to replace?

   With approximately 200 miles of city-owned arterial and collector streets in Saint Paul, there were several factors that were considered when selecting the 24 street segments for construction and/or multimodal improvements: 

   1. The City established five overall goals (in no particular order): 
      1. Improve Regional Transitway Corridors 
      2. Improve Industrial Freight Connections 
      3. Improve Pedestrian Safety and Access 
      4. Improve Connections to the River
      5. Expand the Off-Street Bicycle Trail Network 
          
   2. Ensuring that there are street infrastructure improvements geographically dispersed across all seven of the City’s wards, to improve the entire transportation system throughout Saint Paul. This ensures that wherever you travel in, out, and around Saint Paul there are safer, more efficient roadways that connect to the greater region for all.
       
   3. Saint Paul has an aging street infrastructure; these segments may be more problematic due to any combination of age, current conditions, traffic volumes, maintenance, lack of multi-modal use, accessibility, safety, and/or more. 
       
   4. Improving these street segments should improve the overall safety and usability of Saint Paul’s street system for everyone. In Saint Paul, 91% of severe crashes occur on the City’s arterial and collector streets, which make up about 21% of Saint Paul’s roadway network.

3. With the record-setting state surplus, why not just ask the state for surplus funds to invest in these capital needs?

   The state surplus represents one-time funding for projects across Minnesota, not just in Saint Paul. Saint Paul needs sustained, ongoing resources to address the sizable backlog of deferred maintenance in public infrastructure, city streets, parks, and recreation centers.

4. How much have road construction costs increased?

   Costs have almost tripled, according to the Federal Highway Administration data illustrating the increase in highway construction costs from 2003 to 2022. The chart illustrates a 179% increase in costs during this period. For example, $1,000 of work in 2003 would cost $2,786 in 2022, or $10 million of work in 2003 would cost $27.8 million in 2022. During this time, the City of Saint Paul's overall spending on road reconstruction has been pretty flat.

   

5. How would sales tax revenue be used specifically on streets?

   The sales tax revenue dedicated to complete streets would allow for reconstruction and regular rehabilitation of Saint Paul’s arterial and collector street system, which would improve the safety and multi-modal usability for all residents, businesses, visitors, and commuters across Saint Paul.

   Some of the infrastructure improvements could include: 

   • Physical enhancements in the roadway, such as new concrete sidewalks and curbs, bridges, street pavement, drainage, utilities, streetscaping, lighting, traffic control, public EV chargers, and right of way acquisition
   • Pedestrian and bicycle safety improvements, such as traffic calming, bump outs, visible crosswalks, ADA accessible ramps, dedicated bike facilities, traffic control, and street lighting 
   • Transit coordination with other agencies, including mass transit and commercial freight
   • Sustainable and reimagined green spaces, such as trees, landscaping and other public uses
      

   The dedicated sales tax funding should improve the overall safety and usability of Saint Paul’s streets and public right of way to better meet the changing needs of the community now and into the future.

6. How would Saint Paul businesses be affected?

   Significant changes to where residents and visitors spend money is not anticipated. Businesses in Saint Paul would benefit from streets and parks that are in better condition. Brick-and-mortar businesses in Saint Paul would be on a level playing field with sales from online options, because the sales tax would apply to both.

7. What is the City of Saint Paul’s current investment on streets?

   In recent years, the Public Works Department budgeted about $22 million for street improvements, which was typically split equally for arterial street improvements and residential street improvements. These numbers represent the city’s dedicated funding to streets and do not include non-street improvements, such bridges, traffic signals, other agency cost participation, or grant funding.

8. What is the current “funding gap” to repair city streets?

   To achieve an overall 70 PCI of all Saint Paul streets, the city estimates a cost of an additional $29 million per year. The current annual budget for road-specific improvements is not adequate to keep the city’s street system condition from continuing to decline. Further, more than half of the current annual budget dedicated for road reconstruction ($16.5 million) is bonded. Bonds are a financing tool; not a revenue source.

9. Does the state’s new metro-wide sales tax provide any funding for infrastructure repairs?

   No. The revenue from the newly-passed metro-wide sales tax will fund new housing development across the state and will not be allocated to cities for road repairs.

10. Can an increase in Saint Paul’s Local Government Aid (LGA) cover estimated costs for infrastructure improvements?

    The City of Saint Paul received an increase in LGA, however the LGA program has been cut a few times in the past 20 years and is no longer tied to inflation. If the LGA formula from prior to 2003 was kept, Saint Paul would currently receive an additional $64.6 million in aid per year from the state.

    According to the state LGA formula, the gap between Saint Paul’s unmet need and the City’s certified LGA is $27.4 million – the largest gap of any city in Minnesota. LGA was created to help equalize local funding in communities with smaller and larger property tax bases. About 22% of zoned land in Saint Paul is property tax-exempt, including state government, colleges and universities, hospitals, and places of worship.