Minnesota House Democrats want to raise revenue to help solve a $6.4 billion budget problem, but they also have to work around Republican Gov. Tim Pawlenty and his "no new taxes" stance, which is taken to mean no additional state taxes.
So on Monday, two DFL tax chairmen -- Rep. Paul Marquart of Dilworth who heads the House panel on property taxes, and Rep. Ann Lenczewski, DFL-Bloomington, who heads the House Tax Committee, made a different pitch. The would allow counties to raise the sales tax instead of property taxes to make up for state aid cuts.
Under the proposal, county boards could vote in a half-cent sales tax, subject to a reverse referendum where the hike could be put to a vote of the people if a certain number of people petition for it -- 300 or in some cases fewer. Half the money raised would have to go toward property tax reduction.
Let's just say the proposal is only a political gimmick to find something Pawlenty could support -- since he already allowed Hennepin County to raise a sales tax to pay for the Twins stadium. Let's also say that's all it is -- political gimmick -- because the plan is not good for rural counties troubled by poverty and it certainly isn't good for Beltrami County.
One of the provisos of the Lenczewski-Marquart proposal is that the county sales tax would take the place of any city sales tax, except those in Duluth, St. Paul and Minneapolis. The new county tax, however, would still have to pay for what the city tax intended.
Bemidji, with a 0.5 percent sales tax, is now paying for parks and trails improvements but soon will pay for Bemidji Regional Event Center construction -- a 40-year commitment for sales tax that would become the county's obligation under the House DFL tax proposal.
And let's look at the numbers. With 2006 sales tax figures, the latest available, a 5-cent county sales tax would raise $$1.95 million a year, and a Bemidji city nickel sales tax raises $1.3 million. The latter would continue to pay for event center construction out of the county tax, leaving $644,500 to the county of which half -- $322,225 -- could go to property tax relief. Well, the county has a $17 million levy, so $322,225 doesn't go far in tax relief.
And the remaining $322,225 doesn't go far to mitigate the $2 million the county is estimated to lose in state aids. First and foremost, with the event center in the equation, the current County Board doesn't have the political will to approve a county sales tax and, if it did, signers to a reverse referendum petition would be lined up around the County Administration Building.
We fear such a proposal would be nothing more than a copycat of the school operating levy referendum debacle -- the wealthy counties will gladly approve the extra taxation while poor counties will turn it down, creating two Minnesotas.