Remember the "Jesse checks"? Minnesota sent nearly $2 billion dollars back to taxpayers during the first three years of former Gov. Jesse Ventura's term. House Republicans say, like the Jesse checks, their plan would get tax relief directly into the hands of taxpayers. They want to use about $307 million in a tax relief account to give homeowners a rebate of 10 percent of their 2006 property tax bill.
"For example, if you owe $1,200 in property taxes in 2006, you'd get a $120 check," said House Taxes Committe Chairman Phil Krinkie, a Republican from Lino Lakes and candidate for Congress in the 6th District. He says the plan would apply to 1.2 million homesteaded properties, and the average rebate check would be about $200.
"It's simple, it's easy to understand, it is direct, it doesn't take a lot of computing," he said.
And checks would arrive in homeowners' mailboxes this fall before they have to make their October 15 payment. That also happens to be just weeks before the November election, when all 201 legislative seats are on the ballot.
We need a long-term solution on property taxes. A one-year rebate doesn't solve anything.Sen. Larry Pogemiller
"This is an election year cry for forgiveness," said Senate Tax Committee Chairman Larry Pogemiller, a DFLer from Minneapolis. He says Republican policies led to double-digit property tax hikes, and their plan doesn't fix the problem.
"We need a long-term solution on property taxes. A one-year rebate doesn't solve anything." Pogemiller says Gov. Pawlenty and House Republicans pushed for cuts in local government aid, which then forced local units of governments to cut services and raise property taxes. Republicans said at the time that local governments should tighten their belts, just as the state had to.
Senate Democrats want the state to increase funding for cities, counties and schools, and want to raise business taxes at the same time. Pogemiller says local governments will then either keep property taxes flat, or in some cases, lower them.
Gov. Pawlenty has said if lawmakers think property taxes are too high, they should support his push for a cap on property tax increases. His spokesman, Brian McClung, says Pawlenty is open to the House GOP rebate proposal.
"We're in favor of tax relief, and so we're willing to talk about this and see how we can reconcile the various tax relief proposals between now and the end of the session," he said.
Pawlenty's first priority for tax relief is eliminating the "marriage penalty." It affects more than 400,000 married taxpayers who pay more than if they were single. Eliminating the marriage penalty would cost the state about $50 million.
House Republican leaders had said they wanted to get rid of the penalty, but now say the property tax rebates would leave only about $10 million for other tax relief.
Senate Democrats are also proposing to eliminate the marriage penalty, and would raise income taxes on wealthy Minnesotans to pay for it.
With the House and Senate proposing vastly different tax relief, a tax bill may not make it to the governor's desk this session. And even if House Republicans persuade Democrats to go along with their property tax rebate, the state may not have the money to pay for it. A case before the Minnesota Supreme Court this week will determine the fate of the state's 75-cent-a-pack health impact fee. If the court throws out the fee, the state's projected surplus would evaporate, and House Republicans say the rebate plan would be off the table.