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Progress Proves Elusive
By Laura McCallum , Minnesota Public Radio
June 18, 2001

Four weeks after the regular session adjourned, legislators still haven't resolved major tax and spending issues. The House and Senate held floor sessions Monday, but accomplished little. Some Republicans are accusing Senate Democrats of trying to avoid passing a tax bill, while DFLers say House Republicans haven't adequately addressed their concerns about education funding and the structure of property tax reform.

HOUSE AND SENATE TAX NEGOTIATORS TRADED OFFERS over the weekend, but neither offer was accepted, and both sides returned to publicly debating the details of tax policy without making any major decisions. The fiscal year ends on June 30th, and without a new budget the state will have to shut down non-critical functions. A Republican radio ad running statewide blames Senate Democrats for the stalemate, and House Speaker Steve Sviggum, R-Kenyon, says many in his caucus question whether Senate Democrats' strategy is to run out the clock and not pass a tax bill by July 1. "You know, that's obviously a concern that we have from the standpoint of the Republican caucus is that the Democratic majority in the Senate ultimately doesn't want a tax bill. That's a concern," he said.

Sviggum says that's why House Republicans won't pass a tax rebate returning this year's surplus unless it's paired with permanent property tax cuts. Senate Democrats deny they're stalling on tax relief. They say they've agreed to the overall framework of property tax reform, they're simply trying to minimize the shift in property tax burden from businesses to homes. Assistant Senate Majority Leader John Hottinger, DFL-Mankato, says if lawmakers can't agree on a way to do that, Senate Democrats would support a "lights-on" strategy to avoid a shutdown.

"I think it's a reasoned approach to the fact we have major differences to the most significant change in our tax structure in 30 years. I don't know that postponing that change for a couple of months is such a dramatically bad outcome, our system works pretty well as it is," Hottinger said. "But I think shutting down government while we continue to discuss that is a bad outcome."

House Republicans say there's no reason to delay the tax bill, since the state has a budget surplus, and Gov. Jesse Ventura has said he would likely veto "lights-on" legislation that doesn't include a tax bill. University of Minnesota political science professor Bill Flanigan says if Senate Democrats do delay the tax bill, it would only be a short-term strategy. He says both sides will ultimately have to resolve their differences.

"The various sides are playing chicken with public policy right now, and eventually they have to do that and make some real compromises," Flanigan said. "But in the short run, they can get away with avoiding that, and that seems to be what they're all doing at one time or another." He says both sides seem to be staking out positions to take to the next election, but a lot can change between now and 2002.

In the meantime, the longer the stalemate continues, the more difficult it will be for the state to enact any type of property tax reform, according to Revenue Commissioner Matt Smith. He says with each day that passes without a tax bill, the likelihood of errors on property tax statements and in county and school district budgets increases.

"I think there's an assumption that the bureaucracy, if you will - whether it's at the state level or the local level - can always get things done in a quicker time frame and so there really isn't a need or sense for urgency. And in a sense, that's true, because governments can always find a way to muddle through. But the problem is, it comes at higher costs to the taxpayers, and more mistakes," Smith said.

Smith says property owners may not get truth-in-taxation notices this November. He says counties are currently preparing property tax bills for the coming year under the assumption that the state won't enact any changes, and all that preparation will be wasted if and when the Legislature passes property tax reform.