MPR: Property Taxes Emerge as Favored Target

Property Taxes Emerge as Favored Target
By Laura McCallum, Minnesota Public Radio
May 4,, 2001

THE SESSION WINDS DOWN
Status of some of the major issues in the 2001 Legislature as of Friday, May 4, 2001.
ABORTION - A showdown is brewing over an abortion waiting period included in a multibillion dollar health and human services spending bill. Both chambers have adopted the language, but Gov. Jesse Ventura has threatened a veto. The measure would require women to receive information about risks, alternatives and fetal development, then wait 24 hours before having abortions in most cases. Another bill would deny state teen-pregnancy prevention grants to organizations that provide abortions or related counseling.

AGRICULTURE - The state's soybean growers haven't given up hope that the Legislature will require diesel fuel to be blended with soybean oil starting next year. But neither have truckers and railroad executives given up on the idea that they can stop the plan. Biodiesel has been one of the biggest agricultural issues of this session. A bill expected to get a floor vote would require a 2 percent soybean oil blend in diesel starting next year and 5 percent by 2006.

HIGHER EDUCATION - There'll be a big funding gap to figure out in the session's final weeks between plans from Gov. Jesse Ventura, the GOP-led House and the DFL-controlled Senate. Ventura's proposal, with about $100 million in new money for the two major college systems, is the smallest. The Senate bill contains $268 million in new spending for the University of Minnesota and the Minnesota State Colleges and Universities System. The House is in the middle with $171 million. All three proposals dedicate new money to financial aid as well.

K-12 EDUCATION - The House and Senate far exceed Gov. Jesse Ventura's budget recommendations here. The House bill includes $8.7 billion, or $355 million in new spending. The Senate version tops $8.8 billion. But the two bills differ greatly in how the money is distributed. Education policy differences also run deep, with the Profile of Learning again at the core. The House bill would repeal the graduation standard in favor of more regular tests and a basic curriculum. The Senate bill keeps the profile intact.

TRANSPORTATION- The House and Senate have passed transportation spending bills, but they are far apart in some major policy measures. Both are built around plans to have voters decide whether to dedicate money from vehicle sales taxes to transportation projects. The House would dedicate 60 percent of the money, sending $165 million per year into roads. The Senate would dedicate 50 percent, but use 18 percent of the money for transit. Both bills are about $3.6 billion in total, but the Senate plan also spends $300 million from this year's surplus on road construction.
Source: Associated Press

The Minnesota House has overwhelmingly approved a $1.5 billion tax bill. The bill picked up 39 DFL votes, because many Democrats like its emphasis on cutting property taxes and eliminating the so-called "sick tax."

UNLIKE THE PAST TWO YEARS, when House Republicans pushed for across-the-board income tax cuts, this tax bill is heavy on property-tax relief. Republicans say it will lower property taxes for homeowners, farmers, business owners, renters and cabin owners. "It is balanced, it is bold, and it is bound to bring hope," said Republican House Speaker Steve Sviggum of Kenyon, who made a rare floor speech to tout the bill.

In addition to property-tax relief, Sviggum says the other cornerstone of the bill is getting rid of the state's tax on doctors, hospitals and clinics. "For the families who have a sick member in their family, our words to you are, 'get well, good health - the state of Minnesota ain't gonna tax you.'"

The 1.5-percent tax funds MinnesotaCare, the state's subsidized health insurance program. House Democrats, including Minority Leader Tom Pugh, joke that the reason many of them like the bill is that it seems like a DFL proposal, given Democrats' push for property-tax relief in recent years.

But Pugh says the bill is too heavily slanted toward property-tax cuts for businesses instead of families. Democrats also worry that property-tax cuts to apartment owners will simply line landlords' pockets instead of resulting in lower rents.

Rep. Mark Gleason, DFL-Ritchfield, was one of 25 DFLers who voted against the bill. "We're giving $500 million to the commercial and industrial property in this state. We're giving huge subsidies to landlords with the promise that maybe some of this will trickle down to the renters," he said.

Republicans say a lower tax rate for new apartments will spur construction, easing the affordable housing crunch. The bill also rebates this year's entire budget surplus, projected at $856 million. The rebate and focus on property-tax cuts are similar to Gov. Ventura's tax plan; the main differences are that the governor's plan also cuts income-tax rates, and extends the sales tax to some services.

The Senate has yet to release its tax bill, but like the House, it will emphasize property-tax relief without expanding the sales-tax base. Taxes Committee Chairman Larry Pogemiller, a Minneapolis DFLer, says he'd like to expand the sales tax to sustain property-tax cuts long-term, but his colleagues aren't on board.

"There's no enthusiasm among DFLers on the Senate side to do this heavy lifting, but I'm working on it, I would like to get our Senate - both Democrats and Republicans - to accept the challenge by the governor to do the hard part of reform, and we'll just have to see," he said.

The lack of enthusiasm for expanding the sales tax may be what's holding up the Senate tax bill, which at $600 million is less than half the size of the House bill. Senate Democrats say the House tax cut is so big it prevents new spending on education, transportation and health care.

Pogemiller expects to release the Senate tax bill early next week, and bring the bill up on the floor about mid-week. That leaves little time for the tax conference committee to work out differences by the May 21 deadline for adjournment. But with the House, Senate and governor all stressing property-tax relief, Pogemiller says he's confident the three can reach agreement.

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