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Ventura Holds Firm on Tax Plan
By Michael Khoo, MPR News
March 1, 2001

A new economic forecast that predicts a drop in the state's projected surplus means lawmakers and interest groups will have to reconsider some of their budget proposals. But most say the dip of just over $600 million won't force a major change in priorities; and Gov. Jesse Ventura says the new numbers actually strengthen his case for major tax relief and reform.

Gov. Jesse Ventura says he doesn't consider the reduction in the budget surplus projection drastic. Ventura wants to use the surplus for another round of rebates, significant reductions in the property and income taxes, and a drop in the sales tax rate.
THE LATEST FORECAST ESTIMATES THAT over the next three years, Minnesota will take in $2.4 billion more than it has currently budgeted. That's down from $3 billion projected last November, but Gov. Ventura says he doesn't consider the reduction drastic. Ventura wants to use the surplus for another round of rebates, significant reductions in the property and income taxes, and a drop in the sales tax rate from 6.5 to 6 percent. To offset some of the cuts, he'd expand the sales tax to include services currently exempt. He says despite the smaller pot of cash, he still believes his plan will work.

"If you sit back and think logically, I would say so, yes. That if you look at it logically and if you're courageous enough. You know, it requires courage. You have to have the courage to stand up here and stick to your convictions and do what you feel is the right thing to do and not fall victim to polls and, as we said, short-term special interest pressure," Ventura said.

Ventura is billing his proposal as a way to modernize and simplify the state's tax system. However, resistance at the Legislature has been steep. House Taxes Committee Chair Ron Abrams says he's eager to cut income and property taxes, as well as the so-called "sick tax" levied on doctors, hospitals, and clinics to fund MinnesotaCare. The Minnetonka Republican says he's had extensive hearings on the governor's package, but remains unconvinced the property and income tax relief is enough to justify extending the sales tax.

"I understand what the governor is saying. I'm willing to meet with the governor and the commissioner either publicly or privately. But again, the burden is on the administration to be able to show that the pain of these extenders is worth they gain of the property tax reform. And they've been unwilling to do it," Abrams said.

Administration officials say the proof is contained in the budget forecast itself. Finance Commissioner Matt Smith notes the forecast predicts income tax revenues will drop two percent, but that sales tax revenues are more volatile, dropping 2.6 percent. Smith says that fluctuation can be moderated if the sales tax is expanded to reflect the modern economy.

"If you put the sales tax on a broader base, so it's not just cars, washing machines, refrigerators, and TV sets, but instead it reflects the whole base of consumption, including service consumption, which is the biggest part of the economy now, that will fluctuate less," Smith said.

Although key Democrats have also been skeptical of a sales tax expansion, Sen. Larry Pogemiller, DFL-Minneapolis, the chair of the Senate Tax Committee, says the Senate is willing to withhold judgement for now. He says DFLers are particularly interested in the governor's goal of cutting property taxes. And he says he'll consider any mechanism for doing so, including a possible sales tax expansion.