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Ventura tax plan may be dead on arrival at Capitol
By Laura McCallum
Minnesota Public Radio
November 29, 2001
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Legislative leaders are dismissing Gov. Ventura's idea to expand the state sales tax to cover some services. Last session, Ventura pushed a plan to extend the tax to services while cutting the sales tax rate from 6.5 to 6 percent. Although the idea went nowhere, Ventura has begun floating it again in recent days, but it's not getting any warmer a reception at the Capitol.

In recent interviews, Gov. Ventura has said he may revive his plan to extend the sales tax to services such as lawyer and accounting fees, haircuts and advertising. At the same time, he would cut the sales tax rate by a half-percent.

The proposal would raise about $500 million a year, money that could be sorely needed if next week's revenue forecast shows a budget shortfall of $1 billion, as many expect.

Finance Commissioner Pam Wheelock says the governor believes broadening the sales tax will stabilize the state's tax base in the long run. "I think he has been saying ever since the session ended that he thinks it's just a matter of time before the state will want to reexamine this proposal," she said. "An economic downturn that's affecting every state in the country has prompted that consideration, or pushed it to the front burner again, although faster than he might have thought it would have."

Wheelock says it's too soon to say whether expanding the sales tax to services will be a major component of Ventura's recommendations to deal with the budget shortfall. Regardless of whether the governor plans to make the idea a top priority, legislative leaders say they're not interested.

"No. And I can't be more direct than that," said Republican House Speaker Steve Sviggum, who says Minnesotans told lawmakers last session that they didn't want to pay sales tax on services that aren't currently taxed. He says House Republicans will oppose any tax increase to deal with the budget shortfall.

"We're going to be looking at doing everything potentially except raise taxes, cutting nursing homes, and cutting schools. Those will not be done," Sviggum said.

The idea of extending the sales tax to services got virtually no legislative support last session. Business leaders lobbied vigorously against Ventura's plan, arguing it would drive jobs out of state.

Two DFL Senate leaders tried unsuccessfully to persuade their colleagues to support the proposal. Both of them - Majority Leader Roger Moe, DFL-Erskine, and Taxes Committee Chairman Larry Pogemiller, DFL-Minneapolis, now say they won't go to bat for Ventura on the issue again.

Pogemiller says he supported the sales tax expansion last session because it was part of a sweeping tax overhaul that also reformed the state's property tax system. "When I was open to it last time, it was part and parcel of an overall reform," he said.

Pogemiller says he'll also oppose any attempts to tax clothing, something some legislators are talking about.

While legislators appear to have dismissed the idea of expanding the sales tax to services, Finance Commissioner Wheelock says they shouldn't rule anything out. She says depending on what the alternatives are, it may start to sound more appealing.