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By Marisa Helms
February 7, 2001
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In Anoka, lawmakers held the second in a series of legislative hearings to introduce the public to the governor's tax-reform proposals.Members of the Senate Income and Sales Tax Budget Division mostly heard testimony from non-profit organizations concerned about how the plan's sales-tax provisions will affect them.
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While Ventura proposes cutting income taxes across the board, the meeting's focus quickly turned to concern over the sales-tax reform part of the plan.
Just over a dozen people from non-profit social service, athletic and arts agencies testified before the committee. The sales-tax proposal calls for a reduction from 6.5 percent to 6 percent, but it also expands the tax to include many services that are now exempted. The plan would require non-profit organizations to tax ticket sales and memberships, and could require them to pay local fees for police and fire service.
Non-profits making under $25,000 would be exempt, and all non-profits would still be exempt from income tax and general fund property tax.
Merlin Beebee testified on behalf of the musical and sports organizations he works with. He says the governor's proposal would force those groups to hire an accountant, diverting money that could be used for scholarships and other important programs.
Beebee sees the proposal as an attack on non-profits and compared the governor's approach to a gardener's weed-killing strategy.
"You can dig them out, you can take a selective herbicide and get rid of 'em, or you can get Roundup and you wipe the whole thing out, and it appears that's what we're trying to do here," Beebee said.
Tax Commissioner Matt Smith says non-profits who have testified at the two road meetings were dwelling on the negative aspects of the plan.
"There are actually more sales-tax exemptions in the governor's sales-tax proposal than there are sales-tax increases on non-profits' sales of memberships and tickets," Smith said.
Smith was able to give just one example of an exemption for non profits: They would be able to purchase a car, tax free.
Also testifying was Harold Hamilton, president of a high-tech company in Fridley. He says the predominance of non-profits at the meeting did not represent a good cross-section of Minnesota. He came to represent business, and supports an expanded sales tax and the governor's plan in general.
"He gets an 'A' for courage, no doubt about it. Obviously he's not going to come out with perfect plan, but I'm surprised how much courage and some of the good points of this plan," Hamilton said.
Outstate Minnesotans will get more opportunities to learn about the tax proposal. Other Senate and House committees are planning on getting feedback from as many citizens as they can.
DFL Sen. Don Betzold chairs the Income and Sales Tax Division Committee. He says since the governor is proposing such sweeping changes to the tax system, there's an obligation for lawmakers to get out of the Capitol and find out what people are thinking.
"It's hard to take a proposal like this and condense it down to a 10-minute summary, but yet the people have to buy into it or not. We're not here to sell the governor's plan, we want to hear how it is selling to the people," said Betzold.
Senator Betzold and his committee will hold a final hearing in Hibbing next week.
Final decisions on Ventura's budget proposals won't come until after the state releases another revenue forecast later this month.
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