House DFLers unveil tax bill
House Taxes Committee Chair Ann Lenczewski, a DFLer from Bloomington, says her bill would provide direct property tax relief for 90 percent of Minnesota homeowners. She says she would pay for the package by increasing income taxes on married joint filers earning more than $400,000 a year and for single filers making more than $226,000 a year. She says her proposal would create a fairer tax system since wealthier Minnesotans pay a smaller portion of their income in taxes than middle class Minnesotans.
The House and Senate both want to raise income taxes on high earners. Lenzcewski says it's possible that they may drop the income tax proposal, but she says Gov. Pawlenty has to find some other revenue to pay for some form of property tax relief.
"I do think the governor will come to the table with more resources. Trying to predict what they might be is difficult," she said. "I know we heard that rhetoric the last go around that there would be no new dollars when, in fact, there was a breakthrough with the health impact fee on cigarettes and so there was actually new revenue brought to the table and I think there will be again."
The governor has repeatedly said since he announced his budget proposal in January that a 9-percent increase in spending over the last two-udget is enough. But he indicated last week that he would be open to finding more money.
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"Obviously I made my position on taxes clear: That's not going to be the source of the more money, but there is always some sofa change that lays around in various forms that might be part of a solution," the governor said. "But it's not of a magnitude that will probably satisfy the people on the far end of spending appetite."
Pawlenty didn't specify where he would get the additional revenue. His spokesman said they could reprioritize some portions of the budget but didn't offer any specifics.
Republican House Minority Leader Marty Seifert said last week that greater tax enforcement was one possibility.
Still, Seifert and other House Republicans don't like the tax bill because of the income tax increase.
Rep. Kurt Zellars, R-Maple Grove, said the proposal also doesn't guarantee that property taxes will go down. The bill provides property tax relief in the form of local government aide, school levy buybacks and direct rebates to homeowners. Zellars says increasing aid to local governments isn't a sure-fire way to reduce property tax rates.
"There is no guarantee that Hennepin County is going to go out and keep my property taxes down if we give them more money in LGA or if we give it to whatever cites are out there in Hennepin County. The hope is that they won't," he said.
The Taxes Committee chair says she hopes her committee will vote on the bill on Wednesday and is hoping for a full House vote by Monday. The House and Senate will then have to negotiate their differences in conference committee.
The Senate has a much broader income tax increase on high earners and also increases a statewide business property tax. Those taxes would pay for property tax relief and additional education funding.
Assistant Senate Majority Leader Tarryl Clark of St. Cloud made it clear that Democrats will remind voters that Pawlenty opposed their plan if it doesn't become law.
"We want to be done on time and make sure that we have dealt with the basics for this state," she said. "We hope that what we can do is really move the state forward in some key things that we think are critical for the future of our state. And if we don't get those things done, we want to make sure Minnesotans know who wouldn't let those things happen and it won't be us."
Conference committees on the other budget bills, including funding for health care, education and state agencies, are also beginning their work this week.
