Dayton proposes using new taxes for Vikings stadium funding

Gov. Mark Dayton wants to rely on new revenues from cigarette and corporate income taxes to help pay the state's share of a new Vikings stadium.

Myron Frans, commissioner of revenue, explained Dayton's plan to the Tax Conference Committee Thursday.

It would include two funding sources: approximately $24.5 million in one-time revenues from tax on the current cigarette inventory once the tax is increased. Dayton is proposing an increase from the current tax of $1.23 per pack to $2.52 per pack.

The $24.5 million would be deposited into the stadium reserve account, eliminating its projected deficit, Frans said.

The second source would be to end what Frans called a "tax avoidance" strategy that corporations with sales in Minnesota and elsewhere take advantage of under current law. Currently, he said, some businesses are able to avoid Minnesota corporate income taxes by attributing Minnesota sales to affiliates in other states.

The change, known as Minnesota Unitary Sales, would require reporting all those revenues in Minnesota, increasing a company's income taxes and revenues to the state.

Those revenues would be approximately $26 million in the first year and $20 million per year after that. The revenue would be used as the first backup plan for stadium financing, Frans said.

"It's hopeful we'll never ever need to use this other mechanism," Frans said. He said if it is not needed for the stadium, the revenue would be available for other state programs and services.

The new revenue sources are needed because of the slow rollout of the primary stadium funding source, electronic pulltabs and electronic bingo games in bars. The state is on the hook for $348 million, and Dayton and legislative leaders said they wanted to fix this problem before stadium bonds are sold in late summer.

"I think it works fine," said Senate Majority Leader Tom Bakk, DFL-Cook.