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Senate rejects JOBZ and Vikings, raises local aid

ST. PAUL -- Minnesota senators voted to raze Gov. Tim Pawlenty's rural economic development program Wednesday, called a Vikings stadium study out of bounds and threw some Mall of America expansion proposals into the shopping cart.

ST. PAUL -- Minnesota senators voted to raze Gov. Tim Pawlenty's rural economic development program Wednesday, called a Vikings stadium study out of bounds and threw some Mall of America expansion proposals into the shopping cart.

Senators approved a tax bill 40-27 raising $150 million, mostly by closing loopholes that allow multi-national corporations to pay few income taxes.

They voted to kill Pawlenty's Jobs Opportunity Building Zones tax-break program for new and expanding rural businesses, while also increasing state aid to cities, counties and townships.

Further tax action awaits the House, which has yet to write its bill. Republican Pawlenty has criticized the Senate bill written by Democrats, saying it raises taxes on Minnesotans during an economic slump.

The Republican governor had suggested a slight sales tax cut, but the DFL-controlled Legislature has not accepted the idea.

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Senate Tax Chairman Tom Bakk, DFL-Cook, said the bill provides $115 million in tax relief, mostly via higher local government payments and a tax cap for senior citizens.

The bill does two major things, Bakk said -- provides money to help balance the budget and cuts property taxes.

The budget work is not sexy, he said. "It is just work that has to be done."

Minnesotans should notice a "significant reduction" in property taxes due to added aid to local governments, he added.

The bill is a wide-ranging document that includes:

E Freezing property taxes on homes with owners at least 65 years old, who have lived in the home at least 25 years and earn no more than $40,000 annually.

E Adding $70 million to Local Government Aid paid to cities, $40 million to counties and $5 million to townships.

E Allowing local government payments to automatically rise with inflation without legislative action.

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E Boosting aid to cities 15,000 to 30,000 population $100,000 and increasing payments to larger cities outside the Twin Cities $350,000.

E Removing cabins from the statewide property tax, but forcing cabin owners to pay referendum-approved school levies.

E Providing a property tax credit for farmers who had to kill their cattle herds due to bovine tuberculosis.

E Keeping state policy the same on non-profit organizations' property taxes as it was before a December Supreme Court decision forced some non-profits to pay taxes.

E Establishing a tax on deeds and mortgages for St. Louis, Dakota and Anoka counties to raise money for environmental needs.

The JOBZ program, which gives some expanding and new rural businesses extensive tax breaks, would no longer accept new businesses as of May 1 under the bill. However, existing JOBZ businesses could continue to receive breaks.

While reducing rural tax breaks, senators gave Bloomington officials power to increase sales tax around the Mall of America to help the country's largest shopping center construct an addition. The tax money would go for a new parking garage.

Sen. John Marty, DFL-Roseville, said the taxes are not needed because property around the mall is the most valuable in the state.

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Bakk said the mall is so important to the state that it must do something to help the mall expand.

Marty lost an attempt to remove the mall taxes, but he won on a 41-22 vote an attempt to kill a Vikings football stadium study.

Bakk said voters want to keep the Vikings.

"There is going to be a lot of interest on the part of our constituents that the Vikings don't leave," Bakk said, and a good study of the team's needs would be a good step to a new playing field. "There are other communities that would like to have a professional football franchise."

Marty countered that the Vikings should be able to pay for the study themselves, given the $700 million value of the team. And, he added, that value rose 20 percent in the past two years.

One of the major issues was dumping JOBZ, which Pawlenty established, supported by many rural lawmakers of both parties.

Sen. Dan Skogen, DFL-Hewitt, said JOBZ has helped many businesses in his area - Perham, New York Mills, Pelican Rapids and Wadena.

"JOBZ was able to be plugged into some viable businesses and they were able to create some jobs," Skogen said.

However, senators defeated an attempt to reinstate JOBZ on a 33-32 vote.

A JOBZ audit showed some problems with the program, but rural lawmakers urged their colleagues to give the program a chance.

"I don't think we should just throw it out all of sudden before those issues become resolved," Sen. Bill Ingebrigtsen, R-Alexandria, said.

Some Minnesota communities that had expected to lose property tax revenues because of state rule changes are protected in the Senate bill. It raises property tax rates each of the next two years to offset what otherwise would have been losses.

Electric utilities, as well as airport businesses, face another tax increase as well. The bill places electric plants and airport property on state property tax rolls.

One of the issues not discussed on the Senate floor would help non-profit organizations.

Non-profits are concerned that a December high court decision will force many of them to pay property taxes when they did not before. The bill orders the Revenue Department to keep things as they were before the ruling, and then to report back to the Legislature next year.

The bill would pick up $109 million by closing what Democrats for years have called loopholes in state law dealing with multinational corporations.

Under current law, many of those companies escape paying income taxes.

"They are taking advantage of the rest of us by sending that money off to an island in some other place," Bakk said. "It should be against the law."

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

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