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Senator Novak stated he appreciated those comments, noting that these were complicated issues, and life was not as simple in the Legislature as some people might think. He stated everyone has a point of view on everything these days, and an open forum m which to explain and describe rt. He stated working through all of that is not always simple, however, he thought they have a lot of the facts and history on their side, and was hoping that in the end, they will find a way to resolve the issue in a manner acceptable to the public. Council Member Stigney expressed his personal thanks and appreciation to Senator Novak for the efforts he had made on their behalf with the airport issue, and hoped he would continue this during the next Legislative Session as well. Mayor Coughlin inquired regarding the status of the sales tax on City purchases. Senator Novak stated that at the moment, it was status quo. He stated that over the years he has served on the Tax Committee, and there have been very few years that he did not vote for the tax bill. He stated one of these was the year that provision was included in the tax bill. He stated it was part of a deal that was supposed to bring other revenues, in the form of dedicated sales tax revenues and local aid to the cities. He stated that deal was not honored for more than a year, and in exchange for that they have ended up with the sales tax on city purchases, which, in his opinion, is a tax on a tax. He stated, as will many things in government, once it occurs, it seems to be very difficult to change. He stated it is placed on the books as an expenditure, and it appears to be in tens of millions of dollars, and the process of eliminating this particular provision is not so glamorous, nor does it strike so close to home, as a rebate does. He stated it has become somewhat of a philosophical struggle, and an ongoing issue, which does come up publicly in the Committee discussion. He stated people do attempt to address it, but they have not been successful m changing it at this point m time. He stated the direct answer to Mayor Coughlin's question is that the tax on city purchases is still there, and still being debated, however, it is yet to be resolved. Mayor Coughlin clarified for the residents that this is a provision that requires cities to pay sales tax on purchases. He stated the residents are taxed to fund the City, and out of those funds purchases are made, upon which a state tax is applied. He stated there has been some effort to eliminate that tax on city purchases, which would essentially reduce the cost of local government. Senator Novak stated that it had occurred to him that they have an entire generation of Legislators who have never had to vote for a tax increase. He stated, however, about ten years ago they were in one of the cycles where the state was in deficit. He stated it took about a decade to recover from the depths of the recession, and the budgetary crisis in Minnesota during the early 1980's. He stated that at this time, the state completely lost its credit rating and at one point did not have enough money to pay its employees. He stated, out of all this, from the Perpich administration and through the Carlson administration, and Legislatures of both parties, they have gradually developed a fiscal strategy and a program that has led to not only regaining the credit rating, but a triple A credit rating. He stated this has led to the tax cuts and other changes that most people view to be very positive. However, at that period of time, there were a number of things done to raise money to help stop the "bleeding" at the state level, and the cities paid the price on that particular issue. He stated he agreed • that this should be corrected. 17 C:\ADMIN\MINUTES\CC\8-09-99.CC