Session 2003 Budget and Taxes Business Environment Higher Education K-12 Education Health and Welfare Public Safety Stadium Transportation Audio House passes tax bill (story audio) Listen to a portion of the House tax debate (5/7/03) Photos 'Cut the cord' More from MPR Pawlenty urges Republicans to stand tough on budget (05/07/2003) Two weeks left in the session, $28 billion to spend (05/05/2003) Poll shows support for Pawlenty's budget strategy (05/02/2003) Your Voice Soapbox: "Whether it is a waste of tax dollars to continue to fund and even increase money for government services, social programs, and education, or it is the funding these programs that is necessary for the continued economic improvement our citizenry, depends upon which group of citizens you believe should benefit from government spending."

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House passes tax bill
by Michael Khoo, Minnesota Public Radio
May 7, 2003

House Minority Leader Matt Entenza, DFL-St. Paul, told lawmakers that the Minnesota Taxpayers League is the puppeteer for the Legislature. During debate on the tax bill, he urged them to "cut the cord." (House Television)

Minnesota House Republicans say they've made good on their commitment to hold the line on new taxes. The House voted 70-63 Wednesday to approve a tax bill with no state tax increases. That sets GOP lawmakers up against the DFL-controlled Senate, which is contemplating more than $1 billion in income and cigarette tax hikes. The tax battle will be the key to resolving the overall budget debate.

St. Paul, Minn. — Gov. Tim Pawlenty and House Republicans have said all session long they had no interest in raising state taxes to bridge a $4.2 billion projected deficit. The tax bill makes good on that promise -- not only are there no new taxes, but the measure cuts more than $400 million in state aid payments to cities and counties.

Rep. Ron Abrams, R-Minnetonka, who chairs the House Tax committee, says the reductions reflect the need to spread the budget-balancing across all levels of government.

"And cities and counties weren't asked to do a whole lot out of the 2002 session. I do not believe that it is unreasonable to ask cities and counties to look at their operations and do restraint in the 5, 8, 10 percent range," says Abrams.

But local government officials say the reductions -- as a percentage of the resources they have direct control over --will be much deeper than the 5-10 percent range. In fact, Democrats and city officials say the cuts represent a hidden tax increase, forcing local policymakers to raise property taxes to offset the loss.

The criticism didn't just come from the DFL. Rep. Dan Dorman, R-Albert Lea, was one of 11 Republicans who voted against the tax bill. Dorman says it's misleading to call the bill a no-tax package.

"I'm going to tell you we have to raise our property taxes in Albert Lea. We can't make these kind of cuts. We're not left with any choices. But we may as well be honest and just say, it is what it is," says Dorman.

Senate Democrats have offered a plan that restores a large part of the LGA cuts found in the House Republican bill. Their proposal, however, would also raise more than $1 billion in new cigarette and income taxes. House DFLers have also suggested tax increases, although they offered no such amendments during the six-hour tax debate.

Minority Leader Matt Entenza says the Republican approach preserves recent tax cuts that have mainly benefited wealthier Minnesotans, while underfunding schools, nursing homes, and local governments. Entenza criticized Pawlenty for agreeing with the conservative Taxpayers League not to accept state tax increases.

"Do we want to adopt tax policy that is about fairness and balance? Or do we want to adopt a tax bill that is part of the agenda of the Taxpayers League and the group that I would call the rigid right? And the issue is -- who is calling the tune?" Entenza says.

Republicans, however, say the DFL tax proposals are an outdated attempt to divide the state on economic and class lines.

The tax bill also contains Pawlenty's Job Opportunity Building Zones, or JOBZ. The proposal would create up to 10 tax-free zones in rural Minnesota to jumpstart economic development. Rep. Dean Urdahl, R-Grove City, argued the enterprise zones are desperately needed.

"We see dairies closing, we see livestock dwindling, and we must concentrate the efforts that we have in rural Minnesota, and do whatever we can, to build jobs and to build up the economic base of this state," says Urdahl.

Democrats offered an amendment that would have allowed municipalities in the Twin Cities area to compete for the tax-free zones. Rep. Keith Ellison, DFL-Minneapolis, said urban neighborhoods often face similarly difficult economic prospects.

"I'm in favor of this particular idea. I think it's good," says Elllison. "I want to be known as a supporter of rural Minnesota, but if it's good for you, it's got to be good for us, too."

The Ellison amendent was defeated. But the bill does allow a biotechnology zone meant to encourage new health science investments.

The House bill must now be reconciled with the competing DFL version, which is still under discussion in the Senate.

ROLL CALL

REPUBLICANS VOTING YES

Abeler (R-Anoka); Abrams (R-Minnetonka); Adolphson (R-Minnetonka); Anderson, B. (R-Buffalo Township); Beard (R-Shakopee); Blaine (R-Little Falls); Borrell (R-Waverly); Boudreau (R-Faribault); Bradley (R-Rochester); Buesgens (R-Jordan); Cornish (R-Good Thunder); Davids (R-Preston); DeLaForest (R-Andover); Demmer (R-Hayfield); Dempsey (R-Red Wing); Eastlund (R-Isanti); Erhardt (R-Edina); Erickson (R-Princeton); Fuller (R-Bemidji); Gerlach (R-Apple Valley); Gunther (R-Fairmont); Haas (R-Champlin); Hackbarth (R-Cedar); Harder (R-Jackson); Holberg (R-Lakeville); Hoppe (R-Chaska); Howes (R-Walker); Jacobson (R-Vadnais Heights); Johnson, J. (R-Plymouth); Kielkucki (R-Lester Prairie); Klinzing (R-Woodbury); Knoblach (R-St. Cloud); Kohls (R-Victoria); Krinkie (R-Shoreview); Kuisle (R-Rochester); Lanning (R-Moorhead); Lindgren (R-Bagley); Lindner (R-Corcoran); Lipman (R-Lake Elmo); Magnus (R-Slayton); Meslow (R-White Bear Lake); Nelson, P. (R-Lindstrom); Nornes (R-Fergus Falls); Osterman (R-New Hope); Ozment (R-Rosemount); Paulsen (R-Eden Prairie); Penas (R-Badger); Powell (R-Burnsville); Rhodes (R-St. Louis Park); Ruth (R-Owatonna); Samuelson (R-New Brighton); Seagren (R-Bloomington); Seifert (R-Marshall); Simpson (R-New York Mills); Smith (R-Mound); Soderstrom (R-Mora); Stang (R-Cold Spring); Strachan (R-Farmington); Sviggum (R-Kenyon); Swenson (R-Nicollet); Sykora (R-Excelsior); Tingelstad (R-Andover); Vandeveer (R-Forest Lake); Walz (R-Brainerd); Wardlow (R-Eagan); Westerberg (R-Blaine); Westrom (R-Elbow Lake); Wilkin (R-Eagan); Zellers (R-Maple Grove)

REPUBLICANS VOTING NO

Anderson, J. (R-Austin); Brod (R-New Prague); Cox (R-Northfield); Dorman (R-Albert Lea); Heidgerken (R-Freeport); McNamara (R-Hastings); Nelson, C. (R-Rochester); Olsen (R-Brooklyn Park); Olson (R-Big Lake); Severson (R-Sauk Rapids); Urdahl (R-Grove City)

REPUBLICANS NOT VOTING

Finstad (R-New Ulm)

DEMOCRATS VOTING YES

Lenczewski (D-Bloomington)

DEMOCRATS VOTING NO

Anderson, I. (D-International Falls); Atkins (D-Inver Grove Heights); Bernardy (D-Fridley); Biernat (D-Minneapolis); Carlson (D-Robbinsdale); Clark, K. (D-Minneapolis); Davnie (D-Minneapolis); Dill (D-Crane Lake); Dorn (D-Mankato); Eken (D-Twin Valley); Ellison (D-Minneapolis); Entenza (D-St. Paul); Goodwin (D-Columbia Heights); Greiling (D-Roseville); Hausman (D-St. Paul); Hilstrom (D-Brooklyn Center); Hilty (D-Finlayson); Hornstein (D-Minneapolis); Huntley (D-Duluth); Jaros (D-Duluth); Johnson, S. (D-St. Paul); Juhnke (D-Willmar); Kahn (D-Minneapolis); Kelliher (D-Minneapolis); Koenen (D-Maynard); Larson (D-Bloomington); Latz (D-St. Louis Park); Lesch (D-St. Paul); Lieder (D-Crookston); Mahoney (D-St. Paul); Mariani (D-St. Paul); Marquart (D-Dilworth); Mullery (D-Minneapolis); Murphy (D-Hermantown); Nelson, M. (D-Brooklyn Park); Opatz (D-St. Cloud); Otremba (D-Long Prairie); Otto (D-May Township); Paymar (D-St. Paul); Pelowski (D-Winona); Peterson (D-Madison); Pugh (D-South St. Paul); Rukavina (D-Virginia); Sertich (D-Chisholm); Sieben (D-Newport); Slawik (D-Maplewood); Solberg (D-Grand Rapids); Thao (D-St. Paul); Thissen (D-Minneapolis); Wagenius (D-Minneapolis); Walker (D-Minneapolis); Wasiluk (D-Maplewood)

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