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Senate ups aid to cities and towns
April 29, 2004

St. Paul, Minn. — (AP) The Senate passed a tax bill on Thursday that returns $60 million in state payments to towns and cities that lost more than twice that amount as part of last session's budget-balancing law.

The issue tapped into a well of resentment felt by many rural lawmakers, both Republicans and Democrats, convinced the $150 million their cities and towns lost in local government aid cut too deep and has resulted in steep property tax hikes.

The bill passed 38-28.

Sen. Mike McGinn, R-Eagan, tried to eliminate the provision, noting that the money would largely come from businesses in suburban metropolitan areas by preventing a planned drop in their rate. It would also take some money from property tax rebates to renters.

"It works very much to an unfair advantage," he said.

Many of his own party members disagreed, however, and his amendment died 50-16.

Meanwhile, a Republican from the other chamber, Rep. Dan Dorman, R-Albert Lea, held a press conference with Democrats to back the bill.

Dorman, who opposed the cuts last year, said his actions have put him in hot water with House leaders. "I don't have much more to lose," he said.

The House passed its tax bill last week, without the measure. Now House and Senate members must meet in a conference committee to negotiate the final tax bill.

"We're now in play," said Rep. Paul Marquart, DFL-Dilworth, who joined Dorman.

The tax bill is separate from the Senate's plan to balance the budget, and it is possible both bodies could simply decide not to have a tax bill this session.

The 333-page bills make hundreds of changes to tax law. Among them, it would:

-Give highly fuel efficient vehicles an exemption from motor vehicle excise sales taxes. They would have to get better than 45 miles per gallon on the highway and 35 miles per gallon in city driving. The measure would most likely apply only to hybrids.

-Increase the top income tax rate from 7.85 percent to 8 percent to pay for changes in the alternative minimum tax.

-Allow a $1 income tax checkoff people could use to voluntarily contribute toward to bonuses for veterans of actions in Iraq and Afghanistan.

-Provides various tax exemptions for the development of a personal rapid transit system - defined as a computer-controlled system of small vehicles that run nonstop on an elevated track.

-Call for a study of the costs associated with Gov. Tim Pawlenty's JOBZ program, which provides tax free zones for expanding or new businesses. Lawmakers would have to be told if it has exceeded the $13.8 million originally budgeted for.

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