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Senate passes tax measurel; JOBZ project in danger
"I think we've got a collision course here with respect to a governor's veto," the Senate's leading Republican said. "It's unfortunate. This is not a good bill for Minnesota."
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A tax bill that would close corporate tax breaks, kill off Gov. Tim Pawlenty's pet job development project and increase local government aid by $70 million passed the Minnesota Senate 40-27 on Wednesday.
Designed to help close the state's budget gap, the bill would increase revenues by $150 million in 2008-09, in part by raising utility tax rates, closing a loophole on foreign operating corporations and relying on an accounting shift to capture a one-time gain.
The DFL-controlled Senate rejected proposals by Pawlenty to reduce the state sales tax, trim the renter's property tax refund and eliminate the political contribution refund program.
"I think we've got a collision course here with respect to a governor's veto," said Senate Minority Leader David Senjem, R-Rochester. "It's unfortunate. This is not a good bill for Minnesota."
Brian McClung, Pawlenty's chief spokesman, said, "DFLers are on a tax-raising spree the likes of which haven't been seen for decades, if ever." Referring to the transportation bill passed over Pawlenty's veto, McClung said that DFLers "have already raised taxes by $6.6 billion and [that] the governor has his veto pen ready for any other tax hikes they might dream up."
The closest fight came over the JOBZ program, created by Pawlenty to lure businesses to economically depressed areas. An amendment to retain the program failed by one vote, with a number of DFLers in border areas pleading for its survival. The bill would preserve existing JOBZ agreements but would not allow new agreements after May 1. A recent Legislative Auditor's report said the program had too little oversight and accountability and overstated the number of jobs created.
Senate Taxes Chairman Tom Bakk, DFL-Cook, said that while he was the author of the bill that created the program in 2003, "it clearly isn't doing the job it was intended to do."
Sen. Julie Rosen, R-Fairmont, said the JOBZ program had preserved jobs in her southern Minnesota district that would have gone to Iowa without a tax incentive. "Please do not monkey with the JOBZ program," she said. "We are ready to improve it, but you can't cut it off at the knees after four short years."
Sen. Rick Olseen, DFL-Harris, said that despite the auditor's findings, JOBZ had proved an important tool for border cities.
The House has not yet voted on its tax bill.
Patricia Lopez • 651-222-1288
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Governor: Tim Pawlenty
One of only a few prominent Republicans to win a competitive re-election contest in the Democratic sweep of 2006, Tim Pawlenty is widely seen as politically shrewd and naturally likable.
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