Minnesota House OKs 'smokin' hot tax bill'

  • Article by: JIM RAGSDALE and JENNIFER BROOKS , Star Tribune staff writers
  • Updated: May 1, 2012 - 10:12 PM

GOP said the business-friendly measure, now headed for the Senate, is likely to be part of negotiations with DFL Gov. Mark Dayton.

The Republican-controlled House on Tuesday adopted a business-friendly tax bill that GOP leaders consider to be their signature effort of the 2012 session.

The House voted 73 to 67 to approve the bill, but Senate leaders delayed action on the measure Tuesday night. A spokesman said it will become part of negotiations with DFL Gov. Mark Dayton that have included the Minnesota Vikings stadium and other capital projects around the state.

"It's the most important bill to us,'' said Steve Sviggum, spokesman for Senate Republicans. "We need to make sure it's going to happen, meaning the governor is going to sign it."

And right now, that doesn't look likely, as the bill passed the House over the strenuous protests of DFLers and drew quick objections from Dayton.

"I think we've put together a very, very good bill that will move Minnesota forward in the area of job creation and tax relief for all Minnesotans," said House Taxes Committee Chairman Greg Davids, R-Preston, introducing the final version of what he called the "smokin' hot tax bill" to his colleagues.

"It's smokin' hot only because it's going to be burning a hole in our state budget," responded House Minority Leader Paul Thissen, DFL-Minneapolis.

The bill contains a freeze on the statewide property tax levy for businesses and cabin properties, improvements in the research and development tax credits to spur investment, an upfront sales tax exemption on capital purchases by businesses and a sales tax exemption for data centers that includes computer equipment. It includes property tax relief for homeowners facing large tax increases and income tax credits for businesses hiring veterans.

The costs of the changes to the general fund are estimated at $48 million in the current biennium and $145 million in the coming biennium. Part of the costs would be made up this biennium by using budget reserves.

Dayton had offered an alternate tax cut plan of his own, but told reporters he never heard back from the GOP before the current bill hit the House floor. The governor was particularly leery of the property tax freeze, which he said would cost the state dearly in the next biennium.

"It's just fundamentally unfair to future legislatures and governors," Dayton said, adding that the focus on business tax cuts was itself unfair. "Homeowners have been socked with higher taxes. Renters, senior citizens, farmers and businesses -- they're all deserving of property tax relief."

During floor debate, House Democrats complained about offering tax cuts to corporations instead of citizens, and worried that the money for the tax breaks would end up coming out of the state reserves. "Is there anything that you would put ahead of corporations?" Thissen asked the Republicans. Rep. Steve Gottwalt, R-St. Cloud, accused the DFL of waging "class warfare on the House floor."

"These are job creators; these are our Main Street businesses who are sick and tired ... of the Democrat mantra of how they are somehow the evil wealthy, that they're somehow taking advantage of Minnesota," he said. "They create the jobs that put the food on the table, that create the resources for all the do-gooding you want to do."

The House and Senate will not be back in session until Thursday. That leaves Wednesday to fill in details on key issues still before the Legislature.

"We do have a tax bill, we have an infrastructure and bonding bill that is very important to the state of Minnesota, also a Vikings bill that is very important to the governor and a lot of folks in the state and around the building, so those are unresolved," said Majority Leader Matt Dean, R-Dellwood. "We continue to work on all three of those."

One thing that won't happen Wednesday or Thursday: Any hearings on the Republicans' new plan to pay for the stadium.

"I have no plans to have a hearing; right now I wish I was in Chaska at my kids' baseball game," said GOP Rep. Joe Hoppe, chairman of the House Commerce and Regulatory Reform Committee, where the last Vikings plan started its journey.

Staff Writer Rachel E. Stasseen-Berger contributed to this report. jim.ragsdale@startribune.com • 651-925-5042 jennifer.brooks@startribune.com • 651-925-5049

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