During his State of State speech in February, Gov. Pawlenty said Minnesota's tax policies, job climate and large government discourage economic growth.
He announced plans to form what he called a 21st Century Tax Reform Commission to help fix what he described as an outdated tax code. Two months later, Pawlenty introduced the 15 commission members who will come up with recommendations to make Minnesota more competitive.
"We have concerns in that regard about some barriers or discouragements to the formation of capital and entrepreneurial activity and investment and capital deployment in our state," he said. "And we've asked this esteemed group to consider these concerns and bring forward ideas and recommendations for consideration before the next legislative session to improve our tax code with these thoughts in mind."
Pawlenty said he chose commission members from the business community because they have real world experience with the tax code he wants improved.
“Maintaining the status quo is not an option in today's global economy.”Mike Vekich, chair of tax commission
At least five of the 15 members donated to his political campaigns. Another is a former Republican state senator. Four work for companies that are members of the Pawlenty friendly Minnesota Business Partnership.
Consulting firm owner Michael Vekich of St. Louis Park will lead the commission. Vekich held leadership positions with the Minnesota State Colleges and Universities system and the state lottery.
He was also a Republican candidate for governor in 2002, running against Pawlenty for the GOP nomination. But Vekich doesn't see taxes as a partisan issue.
"The call for taking a hard look at the state tax system isn't Republican or Democrat," he said. "It is coming from both sides of the aisle. And maintaining the status quo is not an option in today's global economy. So my hope for this working group is to take us beyond the debate of where Minnesota falls in any multitude of tax ratings and score cards. Our competition isn't just with the other 49 states but with the world."
The governor said his commission differs from other tax reform initiatives because the focus is on job climate issues.
But the chair of the House Taxes Committee, Rep. Ann Lenczewski, DFL-Bloomington, said the commission looks a lot like another tax panel launched earlier this year.
Lenczewski said she hopes the governor's group will eventually embrace her proposal to end tax breaks for Minnesota businesses.
"That was the bill I proposed about a month ago that would abolish all the corporate subsidies and give instead of a few companies getting a tax break, all companies would pay reduced taxes and thereby be able compete better in the economy," she said.
Lenczewski's counterpart in the Minnesota Sen. Tom Bakk, DFL-Cook, said he thinks the governor's commission should examine the entire tax code, not just the business provisions. Bakk favors an approach that would reduce the volatility in tax collections and the resulting swings from budget surpluses to budget deficits.
The governor's commission is scheduled to make it's report by Dec. 1, and any major debate about tax reform isn't likely until next year.