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Minnesota tax plane on the fly

ST. PAUL -- If Minnesota were an airplane, it would crash because it is overweight, the Senate tax chairwoman said as debate began on a measure making major changes to the state tax system.

"It appears we have too much weight and not enough fuel to get to our next destination..." said Sen. Julianne Ortman, R-Chanhassen. "We are going to have to have an emergency landing."

With Republicans in charge of the Senate for the first time in nearly four decades, she added, "we have a new pilot here on the airplane."

Debate on the bill began Monday and continues today.

The GOP proposal begins a phase-out of the statewide business property tax, uses $7 million to encourage local governments to work together to save money and keeps Local Government Aid to cities at 2010 levels.

The bill does not include an income tax cut like its House counterpart or a corporate tax reduction that was much discussed earlier this legislative session. The differences guarantee that House-Senate negotiators will need to work out a compromise bill.

Gov. Mark Dayton's administration claims the Senate tax bill would raise property taxes statewide by $604 million in the next three years and even with those tax increases, his Revenue Department officials estimate that local governments would be forced to cut $229 million from their budgets.

Sen. Keith Langseth, DFL-Glyndon, complained that the bill eliminates the border cities provision that gives five communities near the Red River authority to provide tax breaks so their businesses can compete with lower-tax North Dakota.

The provision has allowed Moorhead to gain 18 percent population in the last decade, Langseth said.

Senators Monday passed a transportation funding bill 22.8 percent lower than projected.

After a mostly party-line 38-25 vote, the Republican-written bill now advances to negotiators who will work out differences with a similar House-passed proposal.

"In times of financial difficulty, it's important that we use our economic means to fund our priorities, and today we passed a bill that does that," Senate Transportation Chairman Joe Gimse, R-Willmar.

The cut is from general state tax spending; most transportation funding comes from dedicated sources only for highway, transit and other transportation uses.

Senators voted to take $8 million out of a Twin Cities transit fund and move it to help greater Minnesota transit. That comes on top of another $32 million Twin Cities cut.

The total bill costs $4.7 billion.

Of the money, $881 million would be spent next year and $555 million the following year for state highway construction. About $1 billion would be spent on county roads in the next two years, with $300 million sent to cities.

Democrats complained that by bill would reduce transit availability for the elderly and disabled. Gimse disagreed, but said the bill's impact would be monitored.

"We certainly are going to make these reductions, we need to make these reductions, but we are not going to walk away from the people of this state of Minnesota," Gimse said.

In fact, he said, he already is scheduling a meeting for the beginning of the 2011 legislative session to hear from people who say they are hurt by the transportation budget cuts.

Gimse promised that the committee will not "just walk away" from people who need transit.

Sen. Scott Dibble, DFL-Minneapolis, said he strongly disagrees with the transit cuts because they will hurt many people's ability to take part in society.

Don Davis works for Forum Communications Co., which owns the Bemidji Pioneer.