Senators outline DFL property-tax relief strategy

01/05/2007

Tax talk pervaded the Capitol on Thursday, including some individual DFLers who are proposing tax increases.


By Dane Smith,
Star Tribune
Last update: January 04, 2007 – 8:31 PM


Without providing details on actual impacts on future tax bills, leaders of the Minnesota Senate's DFL majority on Thursday outlined the mechanisms of a proposal to slow the rate of property-tax growth, which has averaged about 7 percent in each of the past three years.

Senate Tax Committee Chairman Tom Bakk, DFL-Cook, said the Senate proposal will include market value tax credits, increased aid to local governments and school districts, and more money for the "circuit-breaker" program that provides refunds to low-and moderate-income homeowners and renters.

Bakk said a "significant number" of taxpayers will see reductions in their property-tax bills, but he offered no specifics. Those won't be available until a revised state budget forecast is issued in February, Bakk said.

A November budget forecast projected a surplus in the next two-year budget period of about $2.2 billion. The Minnesota Revenue Department has projected that total property-tax collections will increase by about 8 percent in 2007, or by about $516 million, if all proposed local levies are adopted.

"Many of us heard from voters every day during the election that property-tax increases are out of control," Bakk said in a statement he released at a Capitol news conference.

Senate DFLers have given symbolic distinction to property-tax relief, tagging it as Senate File 1, officially the first Senate bill introduced in the 2007 Legislature.

Republican Gov. Tim Pawlenty, who has been blamed by DFLers for forcing property-tax increases by cutting aid to schools and local government, also made property-tax relief a central campaign issue.

However, Pawlenty favors an across-the-board percentage cap on property-tax increases by local governments. Republicans typically have argued that increased aid to local governments results in more spending by those governments, not dollar-for-dollar reductions in property taxes.

"We will continue to push for a cap on property taxes," Pawlenty spokesman Brian McClung said. "Many local units of government blamed their increases on LGA cuts, when their actual tax increases were far higher than the reductions."

McClung added that Pawlenty also has said that he is open to restoring at least some aid to local governments and school districts.

Increases, too

Even as DFL leaders were promoting their tax-relief plan, other DFL members this week have been introducing bills that feature various tax increases. The proposals include a transportation funding package that would raise the 20-cents-per-gallon gas tax by 10 cents, a constitutional amendment bill that would ask voters to raise the state sales tax by 3/8 of a cent to fund natural resource programs, and a children's health-care bill that would raise cigarette taxes by as much as $1.20 per pack.

In past sessions, the gas tax and natural resource tax increases have enjoyed bipartisan support, but they drew fire from a Republican legislator who said he saw a pattern.

"Right out of the gate, we're seeing Democrats propose tax increases," said Sen. Chris Gerlach, R-Apple Valley. "We have a multibillion-dollar surplus. That ought to be enough." Pawlenty has said that he will oppose and veto any general tax increases, including a gas tax.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said that the DFL caucus' top priority is property-tax reduction and that it would be "improper" to conclude from individual bill introductions that DFLers are committed to a broad array of tax increases.

"What matters is what the committees decide to do in terms of appropriate investments in Minnesota's future," Pogemiller said. "We're done with the bullet points. We're going to do serious legislative work."

Savings on education costs

On another tax-policy front, Pawlenty sent letters to House and Senate DFL tax committee chairs Thursday urging them to conform Minnesota's income tax laws with recent changes in the federal income tax.

An estimated 170,000 Minnesotans would save a total of $24.2 million in state taxes by conforming to expanded federal deductions for tuition and other educational expenses, Pawlenty said in the letter.

DFLers in both chambers have expressed support for conformity.