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Ask LMC: Make the Most of Your New Sales Tax Exemption

Sales Tax Exemption
Q: How can our city take advantage of the new sales tax exemption on construction materials and equipment purchased by our contractor?

LMC: The city must be sure to do two things. First, the city must competitively bid and award separate contracts for the service and the materials, regardless of whether the value of the contract necessitates competitive bidding. Contractors may respond with bids for each contract, and it’s critical that the city reserve the right to accept one bid without accepting the other. Second, the city must formally designate the contractor supplying the materials as its purchasing agent. The purchasing agent agreement has many requirements specifying who has ownership, risk of loss, etc. For more information and a sample purchasing agreement, see the LMC information memo at www.lmc.org/construction.

Red and white stop signTransportation
Q: What do we need to do to comply with new traffic sign retroreflectivity requirements?

LMC: The Federal Highway Administration has enacted regulations requiring cities and others to adopt a sign maintenance program designed to keep traffic sign retroreflectivity at or above specific levels. “Retroreflectivity” describes how light is reflected from a surface and returned to its original source. A certain level of retroreflectivity improves the nighttime visibility of traffic signs.

Although the 2015 and 2018 compliance dates for replacing signs that fail to meet minimum retroreflective standards have been eliminated, cities are still required to adopt a policy by June 13, 2014, establishing an assessment or management method designed to maintain sign retroreflectivity at or above minimum levels. Cities will still need to replace signs identified as not meeting the established minimum retroreflective levels. However, the replacement schedule can be based on resources and priorities rather than specific compliance dates. To obtain a copy of the League’s latest model sign retroreflectivity policy, contact Helene Tetz at htetz@lmc.org or (651) 215-4095.

A group of professionals toast with champagne glassesPersonnel
Q: Can the city rehire someone who recently retired?

LMC: Yes, but there must be at least a 30-day break in service between the date of retirement and rehire, and there cannot be any agreement in place about the rehire prior to retirement. These two provisions help ensure the Public Employees Retirement Association (PERA) plan is in compliance with Internal Revenue Service rules. Also, retirees who are under the Social Security full retirement age are subject to an earnings limit (which is $15,120 for 2013). After they reach that limit, pension benefits may be reduced or suspended. For more information, read “Hiring a PERA Retiree” in Chapter 3 of PERA’s Employer Manual at http://bit.ly/17w1nYK.

Citizen Engagement
Q: How can we help our residents understand more about our city services and how we pay for them?

LMC: One thing your city can do is host a “Community Conversation.” The League is offering a new service to member cities. Community Conversations, Phase II, builds on the sessions LMC staff facilitated around the state, where Minnesota residents learned and talked about cities, services, and funding. In Phase II, trained League staff will give presentations at meetings of community organizations like Rotary Clubs, senior housing groups, church groups, or local chambers of commerce. The presentations are about 20 minutes and focus on the kinds of services cities typically provide, and the different revenue streams cities rely on. LMC staff will then facilitate brief discussions with participants, and can also introduce critical issues that the host city is facing. These sessions can help city officials engage residents and dispel myths about city finances. For more information, contact Rachel Walker at rwalker@lmc.org or visit www.lmc.org/conversations.

Got questions for LMC? Send your questions to choffacker@lmc.org.

Read the January-February 2014 issue of Minnesota Cities magazine

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