Thursday, April 16, 2015

Research Q of the Week: Good Tax News for Cities (4/16)

Question: When does a city have to pay state sales tax on purchases?
Answer: It is rare to get good tax-related news. But, that’s just what the State Legislature gave cities in 2014. It amended state law to provide that statutory and home rule charter cities are exempt from paying sales tax on many goods and services. City purchases of inputs used to provide the following types of services qualify for the exemption:

•    Administration of housing programs
•    Ambulance and public safety services
•    Aquatic facilities
•    Cemeteries
•    Chore and homemaking services for the elderly
•    Correctional services
•    Farmer’s markets
•    Health and fitness centers
•    Housing facilities
•    Ice arenas
•    Licensing services
•    Local festivals and fairs
•    Municipal airports
•    Public transit
•    Recreational and athletic facilities
•    Road and street maintenance and lighting
•    Sewer and water services
•    Wastewater treatment services

In order to purchase items required to provide these services without having to pay sales tax, the city must complete a Form ST3, Certificate of Exemption and provide it to the seller at the time of purchase.

Some examples of goods and services that cities can throw in the shopping cart free from sales tax include:

•    Cleaning and maintenance of buildings
•    Lawn care and tree removal services
•    Construction equipment that is not licensed for road use
•    Most firefighting, police, and emergency equipment including repair parts, accessories, protective gear, fuel, foam, water, etc. (This exemption does not apply to motor vehicles, but another sales tax exemption may apply to some emergency vehicles.)
•    Office supplies, computers, software, printers, furniture, etc.
•    Vehicles that are not licensed for road use, such as aircraft, snowmobiles, and watercraft
•    Road-building materials and the delivery of aggregate materials
•    Utilities, chemicals, and fuels

However, not everything a city purchases qualifies for the sales tax exemption. Purchases by cities to provide the following goods and services remain taxable:

•    Gas and electric utilities
•    Liquor stores
•    Golf courses
•    Solid waste hauling
•    Solid waste recycling
•    Landfills
•    Marinas
•    Campgrounds
•    Cafes
•    Laundromats

For more information on the state sales tax exemption for cities see Minnesota Revenue’s Sales Tax Fact Sheet 176 Local Government – Cities, Counties, and Townships.

Written by James Monge, research attorney with the League of Minnesota Cities. Contact: or (651) 281-1271.

This blog post conveys general information. It’s not legal advice. Please check with your city attorney before acting on this information.

Wednesday, April 15, 2015

Using the Power of Play for Work

Working for a city can be rewarding, inspiring, and exciting. But it can be challenging, as well. Every now and then it becomes necessary to inject a little play into work to revive spirits and renew passion.

Steve Gross—one of three keynote speakers at the 2015 Annual Conference in Duluth—took some time to chat about the power of play. We asked him a few questions:

You use the power of play to build healing, life-changing relationships. How does the power of play relate to the relationship between city officials and their communities?
When I say ‘play’ I’m not referring to a type of activity, or a kids’ game. It’s a spirit you bring to whatever you’re doing—a commitment to be respectful and joyful, and to engage with the world around you. You can strengthen relationships—and your own happiness—by listening to others. Engage them. Be open to new ideas, and show that you value others’ contributions.

How do you encourage engaging the world with passion and joy? What difference does renewing passion and working with joy make?
Einstein said “The important thing is to keep the important thing important.” When you are engaging the world—and work—with passion and joy, you are paying attention and are aware of what’s going on around you. It’s important to set the intention, or create a plan, to focus on the important things, whatever they may be. And you can create a plan to focus on what you need to do to be able to focus on those important things, and then get to that joyful place.

What can others take away when you encourage them to access their own playfulness? How can individuals encourage this in others and how can it benefit the workplace?
The best advice is to be it. Sometimes, when you try to make people be more positive, you can have the opposite result. It’s best to be open, be joyful, be compassionate. If you’re genuine and caring that attitude will be contagious.

Steve will be talking about the power of play, engaging the world with passion and joy, and more at the 2015 Annual Conference. Find out more about the conference—and all three keynote speakers—by visiting  

Thursday, April 9, 2015

Research Q of the Week: Limits on City Employee Pay (4/9/15)

Question: Is there a limit on how much we can pay a city employee?

Yes. Well, kind of—I’ll explain.

State law limits compensation for city employees to 110 percent of the governor’s annual salary with annual adjustments made based on the Consumer Price Index. The governor’s salary for 2015 is $123,912, so *pulls out calculator* the limit for city employees is $165,003.

That’s not a bad chunk of change! Most city employees in Minnesota do not earn nearly that much annually, but there are a few cities that offer these higher salaries in hopes of attracting and retaining the best-of-the-best in highly skilled positions.

The limit does not include other benefits offered like insurance or sick leave. There is also a waiver process a city can go through if they believe the position should be paid more than the limit. For more information on this topic, see the League’s memo on the governor’s salary cap law.

Are you curious now what fair salaries for your city are? We have a tool that can help cities with that! After your city has shared your own salary data, you then gain access to the League's annual Minnesota Local Government Salary & Benefits Survey. The survey results include information on public sector services, salaries (union and non-union), and non-salary benefits. 

Written by Amber Eisenschenk, staff attorney with the League of Minnesota Cities. Contact: or (651) 281-1227.

This blog post conveys general information. It’s not legal advice. Please check with your city attorney before acting on this information.

Wednesday, April 8, 2015

Four Generations—The Hawley Way

By CJ Holl
[The author served with Mayor Gary Johnson as councilmember from 2008 to 2014 and is a current Pelican Rapids city councilmember. Do you have a city story to tell? Submit your idea to]

Gary Johnson was elected mayor of
Hawley, MN in 2008.
Hawley is a small town of 2,500 about 20 miles from Fargo-Moorhead and, like many rural Minnesota towns, has seen many changes over the years. Once a retail center with an agricultural base, the town is now a vibrant bedroom community.

One thing that has been consistent within the city since the beginning is the involvement of the Johnson family. Mayor Gary E. Johnson, the current mayor, has been at his post since 2008. He is the fourth-generation Johnson mayor in the town’s history.

Hawley was incorporated in 1871, and the Johnson mayors date back to Gary’s great-grandfather Andrew Johnson, who served in 1891 and again in 1895. Andrew Johnson brought many businesses to the fledgling community, including a bank, an automobile dealer, a grocery store, a creamery, a potato brokerage, and a lumber yard. The main family business was the Johnson’s store, which was started in 1887 and was a department/general store and later a grocery store in downtown Hawley.

E.P. Johnson, Gary’s grandfather, was mayor from 1946 to 1949 and again from 1952 to 1954. E.P. went on to serve two terms as a representative in the Legislature. Burton Johnson, Gary’s father, served as Hawley’s mayor from 1972 to 1984.

E.P. Johnson’s brother, E.W. Johnson, also served as mayor for one year in 1933. All told, there have been five Johnson mayors of Hawley—spanning roughly 20 percent of Hawley’s 144 years.

The current Mayor Johnson said he learned about hard work and city service from his father, Burton. Burton was mayor for 12 years, and served in city government for a total of 24 years, including a long run as a councilmember.

“It was something all of us were aware of,” Johnson said of his dad’s service. “I remember being 4 or 5 years old and dad coming home at midnight. His commitment was legendary.”

When his father was the mayor, Johnson said, the city had only one meeting a month, which made for a late night, especially for a local grocery store owner.

Johnson said he has been proud of continuing the Johnson civic service tradition, but it hasn’t always been easy. Like most rural towns, as transportation, business, and community needs changed, Hawley lost many downtown retail businesses. Lately, however, it has highlighted its rural, small-town roots and values to attract new residents and businesses including a new concrete plant, a new implement sales and service facility, new retail, as well as other manufacturing and service business expansions. Hawley now is in the envious position of having to attract and free up housing space for new residents.

“We need to be progressive and continue to grow. If you don’t grow, you die,” Johnson said, adding that there is still a need for an enhanced community center, convention and meeting space, housing, a downtown anchor business, additional retail, and recreational amenities.

Johnson, who recently retired after more than 30 years at Honeywell, said he will continue to serve as long as the community wants him. And there could be a fifth generation waiting in the wings. His daughter, Jennifer, hasn’t yet stepped into local politics, but owns a local accounting business and has dabbled in a few committees and civic organizations.

Thursday, April 2, 2015

Research Q of the Week: What the Well? City Authority to Regulate Use of Water Supply (4/2/2015)

Question: Our city provides water to the community, and we've heard rumors that a bigger business wants to drill a private well so it can use the water for its business. Do we have a say in that?

Answer: Since 1949 cities have had authority to regulate “the use of wells, cisterns, reservoirs, waterworks, and other means of water supply” in city boundaries. This authority includes the power to prohibit private wells in a city.

Zoning law provides yet more authority for cities to prohibit private wells or to prescribe areas of the city where private wells are allowed. City zoning authority can also be used to regulate structures, which would include private wells.

Why does this matter? For sure, Minnesota has water. But the supply is not endless. City water systems must protect groundwater supplies and conserve water resources. If all or even a few of the businesses or townhouse associations in your city drill their own wells and use many gallons of water, it can quickly cause problems for city water systems.

So what should cities do to protect local water supplies and infrastructure? To protect your city water supply and system, consider passing an ordinance that deals with private wells. Work with your city attorney to address wells used for irrigation, sprinkling or other uses, not just for drinking water.

The statutes and case law make it clear that cities have authority to regulate the use of wells to the extent of prohibiting them, and to require that the property owner connect to the city's water system in the interest of everyone's safety and welfare.

But remember, the limited tasks of constructing, repairing, and sealing the well are subject to Minnesota Department of Health regulatory authority. That's a blog post for another day. Oh well.

Got questions? You can email LMC's Research and Information Service ( for sample ordinances, or call us at (800) 925-1122 or (651) 281-1200.

Written by Jeanette Behr, research manager with the League of Minnesota Cities. Contact: or (651) 281-1228.

This blog post conveys general information. It’s not legal advice. Please check with your city attorney before acting on this information. 

Thursday, March 26, 2015

Research Q of the Week: Public Hearings and Rearranging the Furniture (3/26/15)

Question: Does the city council have to provide a public comment period at its meetings?

Answer: Most city councils have chosen to provide some type of public comment period at their meetings. But the truth is that the Open Meeting Law does not give the public the right to speak at city council meetings. As a result, it’s up to individual cities to decide if and how the public can participate during a council meeting.

Public hearings are another story. The whole point of a public hearing (discretionary or required) is to provide an opportunity for the public to comment about a particular issue, and the role of city councilmembers is to respectfully listen. Councilmembers should not discuss issues among themselves or debate with the member of the public that provide input during a public hearing. It’s their time to shine.

There are some p’s & q’s for public meetings and hearings that can keep these important listening opportunities golden:
  • The law doesn’t give members of the public the right to talk for however long or about whatever topic they want at public hearings or at a council meeting where public comment is permitted.  
  • City councils have authority to regulate their own procedure and can adopt reasonable parameters regarding public participation, such as regulations that limit the amount of time for each speaker and that require speakers to restrict their comments to issues relating to city business or to the public hearing at issue.
  • Members of the public do not have the right to remain at council meetings or public hearings if they are disrupting the proceedings. For example, a Minnesota woman was recently convicted of disorderly conduct after police removed her from a city council meeting for being disruptive. When the woman arrived at the council meeting, she removed a chair from the public gallery, placed it directly in front of the council’s bench, and refused requests for her to move back to the public gallery.
These rules can keep a meeting running, give opportunity for the public to be heard in a fair manner, and keep the furniture from becoming a point of contention.

Written by Susan Naughton, research attorney with the League of Minnesota Cities. Contact: or (651) 281-1232.

This blog post conveys general information. It’s not legal advice. Please check with your city attorney before acting on this information. 

Monday, March 23, 2015

Urge House Leadership to Schedule a Hearing for Early Voting Legislation

The State Legislature is currently considering League of Minnesota Cities-endorsed legislation that would establish an early voting process similar to what is used in 20 states and the District of Columbia.

The in-person absentee system, the system that is currently in place, involves significant personnel and administrative expenses, as cities that administer elections discovered during the 2014 mid-term election.

Under the current system, a voter enters city hall to vote prior to the election. The voter applies for an absentee ballot and once the application is processed, the voter receives a ballot and then votes. But instead of getting placed in a tabulator, the ballot is processed like all absentee ballots—folded, placed in a series of envelopes, signed, sealed and processed at a later time—seven days before Election Day.

A true early voting system would not change absentee balloting for those who mail in their ballots, it would simply change the abundance of administrative paperwork required when voting in person. At a time when local governments continue to trim budgets to become more efficient, early voting is a cost-effective process that makes good fiscal sense for city governments and local property tax payers. Additionally, early voters would have the satisfaction of actually seeing their ballot placed in a secure tabulator in real time, rather than set aside for processing later.

Early voting legislation has already moved through the Senate, but has not yet been scheduled for a hearing on the House side. Only a few days remain for the House to consider early voting before the second legislative deadline on March 27. City officials are urged to contact House leaders and their legislators immediately to voice support for the bill.

Check out a list of the 22 cities who have passed resolutions in support of early voting.