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Tax Plan Passes Senate
By Laura McCallum
Minnesota Public Radio
May 11, 2001

The Minnesota Senate has passed a $600 million tax bill on a largely party-line vote. Republicans mocked the bill as a puny attempt to throw crumbs at taxpayers, while DFLers say they wanted to balance tax relief with new spending on education, transportation and health care.

The Senate tax bill focuses on property tax relief for homeowners, and rebates about half of this year's projected $856 million dollar surplus. Gov. Jesse Ventura and House Republicans want to rebate the entire amount, and their tax relief proposals are more than double the size of the Senate DFL plan. Majority Leader Roger Moe, DFL-Erskine, says Democrats have a smaller tax cut, but they put more money into unmet needs.

"We tried to find the balance. And I think that's exactly where most Minnesotans are today. They want a balance. They understand that we need to run our schools, and just as it's their money, in terms of the surplus, it is their schools, it is their roads," Moe said.

Senate Republicans offered few amendments to the bill, declaring the DFL package beyond redemption. "It's the worst tax package by far, that's probably been put on this state in 20 years," said Minority Leader Dick Day, R-Owatonna.

Day says the bill has no tax reform, doesn't get rid of the one-and-a-half percent tax on doctors, hospitals and clinics, and cuts in half the rebate checks families are expecting. "It's almost like it's an insatiable appetite that the Democrats in this Senate body have that there is nothing, nothing that you will not do to take every penny from the people in Minnesota," Day said.

Following the bill's passage on a 37-25 vote, Republicans held a news conference outside the Senate chamber to bash the tax package. Brandishing loaves of French bread, they called the bill "half a loaf" for taxpayers. Sen. Kenrich Scheevel, R-Preston, says under the bill, the health care provider tax will go up to two-percent and the gas tax will be indexed to the rate of inflation.

"I mean, think about it - it increases the sick tax when we got a $1.5 billion surplus going on. It increases the gas tax, it only gives you half a loaf on the rebate," Scheevel said. Scheevel says he hopes by the time the bill makes it out of conference committee, it's closer to the $1.5 billion tax plan that passed the House last week. Senate Tax Committee Chairman Larry Pogemiller, DFL-Minneapolis, says the House Republican bill may be bigger, but it's weighted toward business property tax relief. "It's hard to believe that our bill could provide more tax relief for average Minnesotans' homes than a bill that has over twice as much money as we do," he said.

As the tax bill heads to conference committees, lawmakers must now resolve differences between the House and Senate positions. House Republican leaders say unlike past negotiations, they're not willing to simply split the difference between the $600 million Senate bill and the $1.5 billion House bill. House Majority Leader, Tim Pawlenty, R-Eagan, says House Republicans believe they have Gov. Ventura on their side.

"The marching orders are that we can do better than splitting the difference - HAVE to do better than splitting the difference, and with the governor as our strategic partner, we expect to prevail, maybe not totally, but mostly, on all of the issues," Pawlenty said.

Ventura agrees with House Republicans on rebating the entire surplus this year, but he sides with Senate Democrats on setting aside more than $300 million in tobacco settlement money in an endowment. That's money House Republicans are counting on for tax relief. Some observers say if Republicans give up the tobacco money, and Democrats agree to rebate the one-time surplus, all three sides might be pretty close to an overall tax deal.