DFL drops tax plan, seeks end of racino

06/29/2005

Pat Doyle and Dane Smith,
Star Tribune
June 29, 2005

In a move they cast as a major concession in the state budget impasse, DFL legislative leaders announced Tuesday night that they were withdrawing their proposal to raise taxes on the wealthiest Minnesotans.

In return, they demanded that Republicans drop their demand for a racino at Canterbury Park racetrack.

“We’re taking it off the table,” said Senate Majority Leader Dean Johnson, DFL-Willmar, explaining that two days of intense negotiations convinced the DFL leaders that Gov. Tim Pawlenty would not accept the tax increase.

“I would simply declare” that the proposed tax hike “is off the table, and racino is off the table,” Johnson said. “Let’s get over it. It’s not part of these discussions anymore.”

Minutes before the announcement, however, House Speaker Steve Sviggum, R-Kenyon, and Senate Minority Leader Dick Day, R-Owatonna, defended the racino proposal as the most painless way to raise revenue.

“It’s voluntary. ... It creates jobs rather than kills jobs,” Sviggum said. “If you raise an income tax, if you raise a statewide property tax ... a business tax, you kill jobs.”

While not abandoning the racino idea, Day acknowledged that the DFLers had dug in against the racino proposal, which Republicans said would raise $218 million over two years.

There was no immediate comment Tuesday night from the governor’s office on the DFL announcement.

But Brian McClung, the governor’s press secretary, issued a statement saying Pawlenty repeatedly discussed in negotiations a racino in partnership with an Indian band.

Progress and brats

Both sides agreed that they were making progress in their talks. But it was not clear how they would raise sufficient revenue without a tax increase or a racino.

Negotiations went on for more than seven hours Tuesday at the governor’s residence in St. Paul. Johnson characterized the talks as occasionally “quite tense,” but said the negotiators took a break for a bratwurst dinner cooked by Pawlenty.

Johnson urged folks who are planning to visit state parks this weekend “to continue to make those plans.”

Time is running out for an agreement. If one is not reached by Thursday, the last day of the previous budget period, leaders will have to find alternative ways to keep the government—or portions of it—running until a deal is done.

DFLers are seeking to spend hundreds of millions of dollars more than Republicans, mostly on health care, education and aid to local governments to hold down property taxes. The total state biennial budget stands at about $30 billion, so the differences amount to less than 3 percent of the total.

GOP revisions, too

Earlier Tuesday, the governor and House Republican leaders detailed their racino proposal, which would place slot machines at Canterbury Park and give the state a cut of the proceeds. Their estimate of the slots’ adding $218 million to state coffers is up about $38 million from previous estimates.

House Republicans said those proceeds would help fund, among other things, $46 million in transportation projects, $21 million in salary supplements for state government employees and $55 million in local government aid.

The governor and House Republicans also proposed expanding a proposed 75-cent-per-pack cigarette tax to all wholesale tobacco products, adding $17 million in new revenue.

On the health care front, there was some movement on the key issue of who should be eligible for MinnesotaCare and for what benefits.

Over the weekend, the governor proposed using $100 million in proceeds from new cigarette revenue to preserve health care coverage for Minnesotans previously slated to lose their benefits under his plan.

On Tuesday, he proposed that the income cap remain unchanged for childless adults, but it would be lowered for adults with children. He also proposed raising the benefit cap on MinnesotaCare policies for adults without children, from $5,000 to $10,000 a year.

But both plans would take money from the funding pool for MinnesotaCare, called the Health Care Access Fund, and transfer it to the General Fund—a move that Senate DFLers oppose.

Senate DFLers plan to go to work today on a “lights-on” bill to keep key government functions operating temporarily in the event the budget impasse isn’t resolved by Thursday. But Republicans have said that such an arrangement would only postpone hard choices.

Asked if a lights-on bill would pass the GOP-controlled House, Sviggum said, “I’m ruling it out.”