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Minn./Wis. reciprocity: Will workers be torn between two tax bills?
With a reciprocity deal with Wisconsin about to expire, some cross-border workers may have to file in both states.
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Minnesota and Wisconsin residents who work in their neighboring state might get some relief from what could become a tax-time hassle.
Minnesota Revenue Commissioner Ward Einess is willing to renew negotiations on a decades-old income-tax reciprocity agreement set to expire in January, a spokeswoman said. At the same time, some Wisconsin lawmakers have discussed calling a special legislative session to approve a solution.
If no deal is reached, about 13,000 Minnesotans who work in Wisconsin will have to file income tax returns in both states next year. About 8,000 of those will get a tax increase averaging $300 a year.
The good news for Minnesota is that it will generate an additional $130 million in income tax revenue over the next two years -- money it would otherwise have had to wait for.
The 1968 reciprocity deal lets Minnesota and Wisconsin residents who work across state lines file a single return. Because more than twice as many Wisconsin residents cross the border for work, Wisconsin reimburses its neighbor for income tax it collects from Minnesota workers.
But those payments arrive about 17 months after they are collected, a lag that became a key sticking point in negotiations.
Einess was on vacation Friday, but spokeswoman Kit Borgman said the commissioner is open to new talks after the Dec. 2 economic forecast. "The door has always been ajar," she said.
And Gov. Tim Pawlenty? "Our administration is open to reaching a mutually acceptable agreement with Wisconsin," said Brian McClung, a Pawlenty spokesman. But he, too, said not until after the December forecast.
Wisconsin Senate Majority Leader Russ Decker, D-Weston, said he is optimistic an agreement can be reached.
But he is cool to talk of what Wisconsin calls an extraordinary legislative session. "Anything is possible, but we'll be back in January anyway," he said.
Lawmakers from the borders of both states have been trying to goose the two sides back into negotiations after they came to a halt this summer.
"I am encouraged by the potential for good discussion," said Minnesota state Sen. Kathy Saltzman, DFL-Woodbury, who was among a group of Wisconsin and Minnesota lawmakers and staffers who gathered in October to devise a strategy for a new agreement.
The revenue forecast could become deal-breaker for an agreement, Borgman said.
If the December forecast shows a sharp decline in revenue, the state likely won't approve a deal unless Minnesota is paid the millions it is owed.
"If it's a decision between the reciprocity deal and draconian cuts, well, it's all relative," Borgman said.
Baird Helgeson • 651-222-1288
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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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