Starting Jan. 1, cities and counties will no longer have to pay the 6.875 percent sales tax on most purchases. The Department of Revenue estimates that the bill will save local governments across the state more than $100 million a year.
Minnetonka estimates that it paid $484,500 in sales taxes in 2012.
When planning for next year’s budget, the city originally estimated that it would need to grow the levy by 4 percent. Thanks, in part, to the sales tax savings, staff are now proposing a 2.87 increase.
For a median-valued home in Minnetonka—which was worth $273,200 in 2013—city property taxes are expected to decrease less than a percent.
Minnetonka isn’t completely off the hook for sales taxes. Services that compete with private businesses, such as the Williston Center and Ice Arena, must continue to pay sales taxes, and state officials are still in the process of clarifying the new rules.