House Republicans’ counteroffer breaks with Pawlenty on two key points

06/25/2005

Patricia Lopez,
Star Tribune
June 26, 2005

With the shutdown clock ticking, House Republicans appeared to break with Gov. Tim Pawlenty on two key fronts this morning in their budget counteroffer to Senate DFLers.

The GOP offer proposes only a 20-cent-per-pack cigarette fee, rather than the governor’s 75-cent increase. It also adopts an earlier Senate idea of a $330 million local-option income tax that would be levied by school districts at existing income tax rates.

The offer also resurrects an earlier Republican proposal for a racino that would put slots at Canterbury Park racetrack, raising $210 million.

The income tax increases in the House offer would be subject to voters’ referendums and would vary district to district, depending on how much each school district decided to raise.

Unlike the Senate’s proposed statewide income tax increase, the House version would apply only to those districts that opted for the tax. But once adopted, it would be levied on every taxpayer in that district, as opposed to the Senate proposal, which would impose a fourth tier on the state’s top 40,000 wage earners.

Early reaction

Senate Taxes Chairman Larry Pogemiller, who is co-chairing the special session’s tax working group, said the offer “has possibilities,” although he predicted that a racino was unlikely to pass either the House or Senate, because it would need Democratic votes in both bodies.

House Taxes Chairman Phil Krinkie, who has been famously opposed to tax increases of any kind as well as to any expansion of gambling, said today that members of his caucus were concerned about rising property taxes and that the local-option income tax was designed to ease such increases.

The money raised by the House income tax increase would replace the $218 million in education budgetary shifts and the $112 million in property tax increases that had been built into its previous budget offer.

Of his own level of support for the proposal, Krinkie would say only that “we have a patchwork of support in our caucus for this proposal.” Krinkie said his opposition to tax increases has not wavered. “I believe we have enough revenue to cover our needs,” he said.

Pogemiller called the House decision to back away from property tax increases “smart,” and said “we don’t consider this a pie-in-the-sky proposal. We’re going to take a careful look at it.”

A gap, still

The House offer does not completely bridge what is thought to be an $800 million to $1 billion gap between the two bodies, but brings it a step closer to closure.

Officials from the Pawlenty administration were not immediately available for comment on the House offer.

Without a budget deal, the state faces a partial government shutdown starting Friday. Legislators have said they expect to work through the weekend to avert that possibility.