Gov. Tim Pawlenty's State of the State speech Thursday focused on tax cuts and tax credits to create jobs, but Democrats want public works projects as a quicker way.
"Gov. Pawlenty stressed the importance of passing an appropriate and reasonable bonding bill early in this year's legislative session," said Rep. Brita Sailer, DFL-Park Rapids. "I couldn't agree more. But I think his idea of 'appropriate and reasonable' may be a little different than mine, because I want to make sure that enough important projects are funded and hard-working Minnesotans get back on the job."
The Republican governor is proposing an $685 million bonding bill while DFL-led House and Senate bills approach $1 billion.
"Passing a bonding bill early will allow the state to take advantage of rare bright spots in an otherwise bleak economy," Sailer said "Interest rates on borrowing are in the cellar and bids on construction projects are coming in a third lower than expected."
The DFL bill could create 10,000 jobs, and passing the bill soon could put people to work in time for the spring construction season, she said.
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"Gov. Pawlenty wants to cut corporate income tax, but he forgets that 39 percent of corporate income tax comes from non-Minnesotans," Sailer said of Pawlenty's tax proposals. "This may help the large corporations, but it does nothing to lend a hand to the start-ups and emerging companies in Minnesota."
Among tax proposals, Pawlenty called for:
- 20 percent reduction in the corporate tax rate.
- 20 percent exclusion from taxation for small businesses.
- An angel investment tax credit.
- Supercharged research and development tax credit.
- Capital gains exclusion for qualified investments.
- Incentives for companies to invest in Minnesota small businesses.
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"The governor spent much of his speech complaining about Minnesota's high taxes," Sailer said. "In reality, it's the middle-class families that make less than $130,000 who have paid more in property and sales taxes as a percentage of their income during his administration, while those who make more than $130,000 are paying less."
Rep. Larry Howes, R-Walker, the ranking minority on the House Capital Investment Committee, said Thursday that the bonding bill is to fund work on the state's infrastructure, a bill that should reach the House floor on Monday.
Once the bill gets to Pawlenty's desk, "he can use his discretion and do one of three things: approve it, veto it, or selectively eliminate projects and then approve it."
The goal of the bill is to focus on labor-intensive projects, he said, that will help Minnesotans back to work.
"People are looking for jobs and our state needs to make up for lost income tax revenue," Howes said. "The capital investment bill is one tool we can use to help in both areas. Several steps remain in the process, so I will continue working in my leadership role 6to make this bill as effective as possible."
Howes added that "it came as no surprise" that Pawlenty in is State of the State speech "focused on the budget/economy and helping people get back to work."
"I absolutely agree with the governor's call for a bonding bill that is affordable, reasonable and focused and can say with confidence that the House bill meets that standard," said Rep. Alice Hausman, DFL-St. Paul, chairwoman of the House Capital Investment Committee.
"Additionally, the thoughtful way we've crafted the bill makes it a good deal for the taxpayer, and passing it quickly allows us to take advantage of low interest rates and competitive bids, and get more workers off the bench," she said. "I am hopeful the governor agrees that delays are not in the best interest of our state or our citizens."
