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Coalition of Greater Minnesota Cities seeks new tax to spare LGA cuts

A proposal by the Coalition of Greater Minnesota Cities would tax non-essential personal care services and digital music downloads to raise an additional $60 million in state revenue.

If adopted, the bill also would freeze Gov. Tim Pawlenty's "unallotment" of cities' 2010 Local Government Aid and Market Value Credit funds and keep that funding at 2009 levels.

"We believe these cuts will be so devastating in the long run that we have to stop them," said Tim Flaherty, the executive director of the CGMC, in a press conference by telephone Friday morning.

The bill would expand Minnesota's sales tax to include facials, manicures, tattoos and body piercings. It would not include haircuts.

Repeated cuts to LGA have had cities scrambling in recent years to cover lost dollars.

Cloquet Mayor Bruce Ahlgren said cities have been cutting staff and reducing essential services.

"Something needs to be done to make sure our communities stay strong," he said.

The Coalition noted that LGA comprises 2.9 percent of the state's budget but has been asked to cover up to 16 percent of Pawlenty's 2010 budget plan, not including the delay in funding to school districts.

"I do endorse this because I know the governor has asked for additional ideas as to how to balance the budget," Ahlgren said.

Flaherty acknowledge Pawlenty's opposition to tax increases, saying that Republicans are not in favor of new revenue sources and the DFL is advocating for new income or property tax increases.

He said he hopes this bill could be a compromise.

"This is a starting point for the discussion," he said.

The CGMC, he said, will be working in the next 2-3 weeks to obtain bi-partnership support for the bill, which has been authored by Sen. Rod Skoe, DFL-Clearbrook, in the Senate and Rep. Dave Olin, DFL-Thief River Falls, in the House of Representatives.

If legislators are opposed to the bill, Flaherty said, the Coalition will simply ask them what they are willing to support.

"I can't believe people aren't going to think this is better and less of an impact on economic recovery than all these layoffs and service cuts and property tax increases," he said.