House passes tax rebate plan

Under the House bill, the state would send homeowners rebate checks equal to 9 percent of their 2006 property tax bills. The average rebate check would be $185. The bill's sponsor, Republican Phil Krinkie of Lino Lakes, says property taxes around the state went up, on average, 10.5 percent this year.

"This is the simplest, the easiest and the most direct way to issue rebates to those people who are seeing those property tax increases," said Krinkie, whose bill would use about $275 million in a state account containing money that was unspent at the end of the last fiscal year.

There's one catch: if the state loses a case over the state's cigarette fee currently before the Minnesota Supreme Court, there will be no rebate checks.

We're going to go out here and act like we really did something for people. But we didn't do nothing for anybody. What we did is we disrespected the people of Minnesota by making them think that they're not smart enough to see what's going on here

The House voted 86-to-47 for the bill. Some Democrats say Krinkie's plan is unfair, because rebate checks would go only to homeowners, leaving out 270,000 renters. The checks are also based on the size of a homeowner's property tax bill, and there's no limit on how large the rebates could be.

DFL Rep. Jim Davnie of Minneapolis says the tax relief is tilted toward wealthier Minnesotans.

"The money's going to the big people. If you're paying 4 or 5 or 6 or 7 or 8 or $9,000 on your mansion in property taxes, you're going to get hundreds and thousands of dollars," he said.

Davnie tried to amend the bill to include renters, but his attempt narrowly failed by a vote of 65-to-67. Republican Paul Gazelka of Brainerd says the Legislature should focus tax relief on the homeowners who've seen double-digit property tax increases.

"One of the groups that screamed to me is the property owners about why our taxes are going up. A group that hasn't talked to me is the renters saying that their taxes have been going up. They're not the ones screaming to me, it's the property owners," he said.

Some Democrats criticized the bill for offering one-time rebates instead of long-term property tax relief. They tried unsuccessfully to change the bill to use the money instead to increase aid to local governments. DFLers say that would lead to lower property taxes in the long run. They also called the rebate a meaningless gimmick designed to make voters forget about their frustration with property tax hikes right before the election.

DFL Rep. Keith Ellison of Minneapolis, who, like bill sponsor Krinkie, is running for Congress, says the rebate checks are a Band Aid for past budget cuts.

"We're going to go out here and act like we really did something for people. But we didn't do nothing for anybody. What we did is we disrespected the people of Minnesota by making them think that they're not smart enough to see what's going on here," Ellison said.

Krinkie says the Legislature would be foolish to use money from the state's tax-relief account for long-term reform, because the fund will quickly be depleted. Krinkie hopes the lopsided House vote for his bill will persuade the Senate to consider the measure.

But don't spend your rebate check yet. The DFL-controlled Senate passed a very different tax bill that would increase local government aid, and Gov. Pawlenty has called for focusing tax relief on eliminating the so-called marriage penalty.

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