The Minnesota House Monday night passed a tax bill that would provide property tax relief for some homeowners and prohibit new businesses from getting tax breaks from the JOBZ program. After eight and a half hours of debate, the House passed the bill 80 to 52.
The bill would eliminate the JOBZ economic development program for new businesses, and would tighten oversight on businesses that already receive tax breaks.
The bill would also provide property tax relief for Minnesotans who pay more than 2 percent of their household income in property taxes.
Supporters of the bill say the plan would require the state to pick up a greater share of property taxes for people whose yearly property tax bill is greater than two percent of their income.
The plan, however, would no longer allow Minnesotans to deduct their property taxes on state income taxes.
Rep. Paul Kohls, R-Victoria, said the Revenue Department found a majority of Minnesotans would pay more under the bill.
"They're going to see an income tax increase. Whether they're Democrats or Republicans. Whether they live in urban areas, suburban areas or the rural areas of Minnesota. Whether they make a modest amount of income or a significant amount of income," said Kohls.
Rep. Paul Marquart, D-Dilworth, does not think the proposal is a tax increase, because it rearranges money from existing property tax relief programs.
"We had some very tight limitations. The governor has set up a very small and narrow strike zone but we think this property tax relief bill throws that baseball right down the middle. We think it's governor friendly," Marquart said.
Pawlenty objects to the plan, because homeowners would no longer be able to deduct their property taxes from their state income taxes. Pawlenty wants to cap property tax increases.
The House bill would not do that, but contains a levy limit that would kick in if the property tax climate deteriorates statewide.
The tax bill would also end Gov. Pawlenty's key economic development plan for rural Minnesota.
The bill would prohibit new businesses from getting tax breaks from the JOBZ program. It would also tighten oversight of the program.
Rep. Ryan Winkler, DFL-Golden Valley, said JOBZ did not deliver on promises that it would provide high-paying, quality jobs.
"This program doesn't work, and can't work because all it does is move jobs around. The net effect on the state of Minnesota on a whole is really nothing," said Winkler.
Republicans failed in their to attempts to keep Pawlenty's initiative in its current form.
Rep. Kurt Zellers, R-Maple Grove, said the program is working in rural Minnesota.
"Whether or not those jobs made a dramatic impact in the metro area or statewide, I guarantee you the communities that kept those jobs, people who are now working in those corporations or are working in those plants, are very happy that JOBZ was there," said Zellers.