Senate DFLers roll out revenue plans

04/22/2005

Patricia Lopez, Star Tribune
April 22, 2005

As some Senate DFLers presented revenue proposals Thursday that could help finance their caucus’ plan for a $900 million state budget increase, House Republicans used props to illustrate the added tax bite.

Standing before a table filled with props—Marlboro cigarettes, Grain Belt beer, a red gasoline can and a pile of clothing --House Speaker Steve Sviggum, R-Kenyon, outlined what various tax hikes would cost the average Minnesotan.

A pack-a-day smoker? He’d pay an extra $365 a year under a $1-per-pack tax increase.

A single mother of one child making $50,000? Her tax bill would increase $214 under a 10 percent income tax surcharge.

Extending the sales tax to clothing would cost a family of four $338, Sviggum said, while a 10-cent-a-gallon gas tax increase, as proposed in the Senate, would boost the fuel bill for a two-car household by $156 a year. Reminded that he has expressed support for a higher gas tax, Sviggum laughed and said, “Yes, but it’s never going to get through the House.”

His prediction was borne out hours later when the House Transportation Finance Committee defeated a 5-cents-a-gallon gas tax increase proposed as a constitutional amendment by Chairwoman Mary Liz Holberg, R-Lakeville. Some Republicans joined DFLers to defeat the proposed amendment, which would have been on the 2006 general election ballot.

Then, Republicans opposed an unsuccessful DFL push to raise the tax starting in June, without a referendum. An omnibus transportation finance bill finally passed the panel without any gas tax increase.

Meanwhile, individual DFL senators made their tax pitches.

Sen. Jane Ranum, DFL-Minneapolis, chairwoman of the Senate’s Public Safety Budget Division, would raise wholesale taxes on liquor, wine and beer by $24 million per year, or about 1 cent per drink. The money would be dedicated to public safety, primarily reduced sex-offender probation caseloads, chemical dependency treatment and crime victim aid.

Sen. John Hottinger, DFL-St. Peter, proposed a temporary rollback of the 1999 income tax rate cuts, which he said would raise $863 million in 2006-07—all of which would be pumped into education. Under his plan, rates would go from 5.35 percent in the bottom bracket to 5.4 percent, from 7.05 percent to 7.7 percent in the middle bracket and from 7.85 to 8.7 for the top bracket. Rates in 1999 had been at 6 percent, 8 percent and 8.5 percent, respectively.

Taxes for a single person making $25,000 would stay the same under Hottinger’s proposal, while a head of household making $60,000 a year would pay $164 more in 2005 than in 2004. A married couple making $125,000 would pay an extra $1,506, while a single person earning $350,000 would shell out an additional $6,431.

The Senate Taxes Committee took testimony on state laws on foreign operating corporations, which Senate DFLers say have used loopholes to escape fair levels of taxation. Chairman Larry Pogemiller, DFL-Minneapolis, has said tightening the law could recoup $200 million for the state. Sviggum said he considers the proposal a “job killer” and predicted it would fail in the House.