Dayton gets last word as he vetoes reworked GOP tax cuts

Some had hoped he'd sign bill as thanks for GOP stadium support.

In a stinging coda to a divisive legislative session, DFL Gov. Mark Dayton on Monday vetoed a GOP-led package of business property tax breaks that were a top priority for many of the state's corporate leaders.

The veto came hours after a session-ending triumph for Dayton and a bipartisan group of legislators, when Dayton made a rare, ceremonial show in the Capitol rotunda of officially signing the bill to create a new $975 million home for the Minnesota Vikings.

Those who wondered whether Dayton would sign the tax bill as a goodwill gesture after some Republicans supported the stadium got their answer when Dayton issued a harshly critical, three-page veto letter.

The tax bill, he said in the letter, would have blown a $100 million hole in the state budget in coming years. "It ignored my requirement that any future spending must be paid for and avoid adding to the next biennium's projected deficit," he wrote.

Republicans touted the tax bill as a chief component of their job-creation agenda, and had scrambled to piece together a scaled-down bill after Dayton vetoed a much larger version two weeks ago.

House Speaker Kurt Zellers called the veto "personally offensive and outrageous," saying it put a "Closed for Business" sign across the state.

The plan would have given tax breaks for research and development, investment in new businesses, historic preservation and the Mall of America expansion. Tax rebates on capital equipment purchases would have been replaced by upfront tax breaks to small businesses purchasing capital equipment. Included was a provision Dayton sought: giving tax breaks to employers who hired veterans.

But Dayton said the bill tilted too heavily toward business, to the virtual exclusion of homeowners, renters, farmers and senior citizens. In three years, he noted, businesses would have gotten 24 times the tax relief afforded to homeowners.

"There is no question that Minnesota businesses have been hit hard by recent property tax increases," he wrote. "But so has everyone else! ... I remain committed to broad-based, comprehensive property tax relief for all property taxpayers, including -- but not limited exclusively to -- businesses."

After weeks of intense lobbying, state business leaders were unhappy with the veto.

"The governor showed a great amount of flexibility on his top priority, the stadium, and little or no flexibility on issues related to small-business job creation," said David Olson, president of the Minnesota Chamber of Commerce.

GOP legislators say they now realize they should have insisted on the stadium and tax bills as a package deal to ensure that both became law. Rep. Greg Davids, chairman of the House Taxes Committee, accused Dayton of trading stadium votes from DFLers in return for vetoing the tax bill, robbing Republicans of a chief accomplishment.

"Dayton got everything he wanted," said Davids, R-Preston. "It was a finely crafted tax bill that he torched for political purposes."

Senate Taxes Committee Chairwoman Julianne Ortman said the bill offered a lot of relief for business for only a tiny burden on the budget. "This was a terribly unfortunate, very partisan veto and he did it at the expanse of all the cities and businesses of Minnesota," said Ortman, R-Chanhassen.

Dayton spokeswoman Katharine Tinucci said there was no collusion. The governor, she said, had been crystal-clear for months that the stadium and tax bills would each have to stand on their own merits.

"The tax bill was never about trading votes or getting votes," she said.

House Minority Leader Paul Thissen praised the veto and said there was no bartering with the governor. He and other DFLers said Republicans tried to leverage the stadium to force Dayton into signing a tax bill that would have tapped emergency budget reserves.

"Had they read the initial veto letter they would have realized that it was not a tax bill he would ever sign," said Thissen, DFL-Minneapolis.

The furor over the veto letter came just hours after the ink dried on what is likely to become a signature achievement in Dayton's legacy.

Dayton was greeted by cheers -- and a few hecklers -- as he signed legislation to build a new taxpayer-funded Vikings stadium.

"I'm proud of those who stepped forward and said, 'This is what makes Minnesota special,'" Dayton said.

The governor and Vikings owner Zygi Wilf were joined by scores of political, business and labor leaders, who nervously watched as a small group of homeless advocates held protest signs and chanted "Shame! Shame!" But the crowd was dominated by fans in Vikings jerseys, who countered by loudly singing the team fight song and giving Dayton a standing ovation.

"These bills that involve major public investments are understandably controversial," said the governor, who on more than one occasion had to ask the hecklers to let him speak. "They're hotly debated. They're closely inspected -- as they should be. That's democracy, and that's Minnesota."

Baird Helgeson • 651-925-5044

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