Tax, transportation accord far away

The 2008 Minnesota legislative session won't convene until Feb. 12, but the maneuvering already has begun over priorities between the DFL-controlled House and Senate and Republican Gov. Tim Pawlenty.

It looks as if they'll be starting pretty far apart before they even begin, particularly on two sticking points that resulted in stalemates in 2007: taxes and transportation funding.

Looming over what does or does not get accomplished is a stumbling economy that resulted in a November forecast that projected a $373 million deficit against a base budget of about $34 billion.

"It's serious and important, but it's not so large and overwhelming that it can't be addressed without too much tumult," Pawlenty said Thursday.

He spoke at an annual pre-session meeting with reporters sponsored by the Associated Press.

This is an election year for House members, and a new twist in the mix includes a veto-proof majority in the DFL-controlled Senate. All the factors contribute to a sense that it'll be a long way until midnight on May 19, the constitutional end date for the upcoming session.

In broad-brush terms, Pawlenty outlined a legislative agenda Thursday that focused on assistance to the state's military personnel, a renewable-energy package, and containing the growth of government and health care costs. Legislative leaders in the House and Senate also laid down their priorities, which include passing a comprehensive transportation bill and a capital investment bill that will likely top more than $965 million for state construction projects.

House focus: property taxes

House DFL leaders want property-tax relief, investment in education and nursing homes, and an economic package to stimulate job growth, particularly in "green collar" jobs, a newly emerging term for environmentally friendly industries.

Even after the collapse of the Interstate 35W bridge in August, a disaster that has come to symbolize the divide over transportation needs in the state, hang-ups over transit funding appear to remain unresolved from the final days of the 2007 Legislature. Pawlenty, who vetoed a transportation bill passed by both chambers, indicated he would support a modest increase in the state's gas tax to fund roads and bridges but wants any increase offset by decreases in other taxes. But he also said he would resist large-scale funding for any new transit, which includes things such as light rail and buses.

"If it were just about the gas tax or just about roads and bridges, I'd be more hopeful. But when you throw in this whole bucket of transit issues and how big the other tax increases have to be and what kind of taxes those have to be, that gets to be exponentially more complex and controversial," Pawlenty said.

Transit is Senate priority

Earlier in the day, the DFL chairs of two key House and Senate budget committees said they see continued increases in local property taxes as a main concern in the upcoming session, pointing to a study released this week that shows that property taxes payable in 2008 are projected to increase 8.8 percent over 2007. Pawlenty vetoed the 2007 tax bill, in part over a provision that required budget forecasters to take inflation into account.

Sen. Tom Bakk, DFL-Virginia, the chairman of the Senate Tax Committee, said local governments are being forced to rely more heavily on property-tax increases to pay for basic needs such as schools and roads. Bakk said he has worked to remove offending portions of the vetoed tax bill and would hope Pawlenty would find the measure more palatable.