Skeptical legislators split up $500 million Mayo Clinic bill

Before Mayo Clinic gets half a billion dollars from Minnesota taxpayers, legislators want the city of Rochester to dig deeper into its own pockets.

"I intend to start by having the local community chip in a lot more than they are," said House Taxes Committee Chairwoman Ann Lenczewski, DFL-Bloomington.

The health care giant — also the state's largest employer — is asking for more than $500 million in taxpayer funding to support its $3 billion makeover for downtown Rochester.

Mayo argues that unless the city gets more amenities like hotels, restaurants and theaters, the world-renowned clinic will be forced to divert its resources to its clinics in warmer, friendlier, Sunbelt states.

The Taxes Committee response to Mayo's plan was to split the bill in half. By voice vote Tuesday, legislators sent part of the bill on to the Capital Investment Committee, where Mayo's requests will have to slug it out with hundreds of other projects on the bonding bill wish list.

The tax provisions will remain in Lenczewski's committee, to be debated and possibly included in this year's tax bill.

"I think some people think this motion is to kill this proposal and it is not," Lenczewski said. "This is to keep it alive."

The tax committee's debate is likely to start with questions about why Rochester is not first raising more local taxes to pay for its own downtown face-lift.

"I'm not saying no to everything," Lenczewski said. "You've got to show us you're lifting your own weight before you ask us for anything."

Rochester has some of the lowest local-option sales-tax rates in the state, she said. Why not raise hospitality taxes? Why not hike the county sales tax? And why is Rochester asking state taxpayers to fund a trolley system to shuttle Mayo patients around town, while cities such as St. Paul and Bloomington are footing much of the bill for their light-rail systems?

"I've done the analysis on the St. Pauls and Minneapolis and St. Clouds and Duluths. Whenever they've had a banner project, they're asked to put in way more than Rochester," Lenczewski said. "So Rochester is the same size as Bloomington. They've got a lot of local taxes we can turn on for them. I'm going to ask them to contribute more before they get a dollar out of the state."

A shock for Rochester

This turn of events may come as a shock to Rochester, said the Mayo bill's sponsor, Rep. Kim Norton, DFL-Rochester.

"I think I'd need to see what her suggestions are before I could agree to them," Norton said. "There's been no talk of that at all in our community and I think that it will come as a surprise to local citizens,"

But Norton acknowledged that dividing the bill at least allows the Mayo proposal to keep moving forward in a Legislature that is rushing to finish its work in the next seven weeks.

The Legislature is set to adjourn on May 20.

Including Mayo's Destination Medical Center funding in the final tax bill might be good news, Norton said, "but it's only good news if it's not hurtful to my local community."

Rep. Greg Davids, R-Preston, worried about splitting the bill, since this isn't a traditional bonding year and there is no guarantee the Mayo provisions will make it out of the Legislature.

'We need to get going'

"There were many of us in this committee that were thrilled with this bill as-is," Davids said, noting that Gov. Mark Dayton thought highly enough of the Mayo plan to send his chief of staff, Tina Smith, to Rochester later this week to discuss the project.

"I'd like to see this as a stand-alone bill," Davids said. "This is an extremely important bill that I think has the merit to go forward on its own. ... I am very concerned that we have less than two months left. This is a big deal that we need to get going."

Mayo has already signaled that without a funding guarantee from the Legislature this year, it may choose instead to expand its campuses in Arizona and Florida.

"With big proposals, it is not unusual that policymakers seek to explore and examine other options," Mayo spokesman Karl Oestreich said by e-mail. "At this stage, several lawmakers have indicated they like our [Destination Medical Center] proposal and other lawmakers are examining different options. This is to be expected."

Oestreich said Mayo officials are "very encouraged" that their bill has passed policy committees in the House and Senate largely intact.

"Most importantly," he wrote, "policymakers appear focused on how to do [Destination Medical Center] — not whether to do [Destination Medical Center.]"

Jennifer Brooks • 651-925-5049