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Senate Democrats target top-level employees with budget plan
by Laura McCallum, Minnesota Public Radio
April 2, 2004

"Last year, Pawlenty and the House Republicans increased property taxes and cut vital services in health care, crime prevention and education programs which affect the average Minnesotan," said Senate Majority Leader Dean Johnson, DFL-Willmar. "This year, it is time to cut state government." (MPR file photo)

Senate Democrats on Friday outlined a budget plan that contains several key differences from a House Republican plan released two weeks ago. Both plans eliminate a projected $160 million deficit. Senate DFLers say their plan closes corporate tax loopholes, while the House plan relies in part on money from expanded gambling. The competing plans set the stage for difficult budget negotiations.

St. Paul, Minn. — The House and Senate plans use money from some of the same sources. Both plans rely on collecting about $35 million in sales taxes on car leases upfront instead of monthly over the course of the lease. Both plans would use surplus money from a fund that pays for state subsidized health insurance.

House Republicans want to use the entire $70 million surplus, while Senate Democrats propose a short-term loan of $40 million. Both plans would cut state agencies, but the House cut is 3 percent, while the Senate cut is 5 percent.

	Sviggum's critical

Neither the Senate nor the House plan would use money from the state's cash reserves. The major similarities between the two plans stop there.

Senate Finance Committee Chair Dick Cohen, a St. Paul DFLer, says the Senate plan would eliminate about three dozen high-level positions in the Pawlenty administration.

"The governor had suggested it was time to share the pain; we thought we'd take him up on that. We've had the pain spread throughout the state at a variety of levels with any number of people, but we've excluded, unfortunately, the pain being shared by the upper levels of the Pawlenty administration," Cohen said.

House Republicans want to use about $30 million from a proposed casino at Canterbury Park. The Senate plan doesn't include gambling revenues, but would rely on nearly $58 million from changes in the state's corporate tax code. The proposal would affect some Minnesota companies that now avoid state taxes by qualifying as foreign corporations.

Senate Taxes Committee Chairman Larry Pogemiller of Minneapolis says the changes would close paper tax shelters.

"This is really non-controversial stuff, and if there are companies that feel that this technical correction-type stuff adversely affects them, the Senate Tax Committee is going to work with them," Pogemiller said.

Republican legislative leaders say the Senate's proposed tax changes are anything but non-controversial and technical. House Speaker Steve Sviggum of Kenyon says the proposal is a corporate tax increase.

"Bottom line is it increases tax burdens on job providers by 10 percent. Now these are job providers that we want here in the state of Minnesota," Sviggum said.

	Time to share the pain, Cohen says

Sviggum says Minnesota already collects $500 million a year in corporate taxes. Sviggum and other House Republican leaders also criticized the Senate leadership for putting their plan on a fast track. The Senate plans to vote on its budget in one bill next Wednesday.

The House passed three budget bills this week, and plans to pass another five next week. House Ways and Means Committee Chairman Jim Knoblach, a Republican from St. Cloud, says the Senate will end up with what's described at the Capitol as "a garbage bill."

"It's all going to be rolled into one bill. We don't have the details on what's going to be in that bill. Tuesday is Passover. Monday is a short day because we have to be done by about 4 o'clock because of Passover, the public's going to get no input whatsoever to this," Knoblach said.

Senate DFL leaders say they've been holding hearings on various budget proposals for weeks. They also say they'll insist on negotiating the budget in public, instead of the closed-door negotiations typically held between top legislative leaders and the governor's office.

If the public posturing is any indication, those negotiations will be contentious. Gov. Pawlenty released a statement saying the Senate budget plan is based on tax increases and bad public policy.

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