Pawlenty vetoes tax bill

A spokesman for Gov. Tim Pawlenty said no one should be surprised about the veto of the tax bill. He said the governor warned DFL legislative leaders that's what he would do if the bill required state budget analysts to factor inflation into their forecasts. The language stayed in the bill and now the entire tax bill is out.

Pawlenty could not use his line-item veto power on the inflation language because it did not include any spending. Pawlenty's spokesman, Brian McClung, says the governor objected to the provision because it would line up every state program for an automatic funding boost.

"If people feel bad about provisions that were lost as a result of that veto, they should take it up with DFL legislative leaders who are aware that if the controversial language involving putting government on autopilot stayed in the bill that it would be vetoed, talk to them about why they chose not to remove that before they chose final passage," he said.

DFL House Speaker Margaret Kelliher and DFL Senate Majority Leader Larry Pogemiller issued statements saying they were disappointed with the veto since it included several good things for the state.

Rep. Paul Marquart's criticism was a bit harsher. The DFLer from Dilworth characterized Pawlenty's reason for vetoing the bill as a "cop out." Marquart said most governments and businesses factor inflation into their budget forecasts.

Marquart points out that Pawlenty has now vetoed two property tax relief bills this session -- the omnibus tax bill, which included $93 million in aid to local governments --- and a bill that would have increased income taxes on Minnesota's top earners in exchange for property tax relief.

"Quite frankly, I don't think the governor was ever serious about property tax relief or providing aid to our local units of government," Marquart said. "I think for the governor to say he's going to veto this because of one provision out of dozens of good provisions really is disappointing. I think the governor made a mistake and really did the citizens of this state a disservice by vetoing that bill."

Marquart chairs the Property Tax Relief Division in the House. He said he's going to continue to push for property tax relief next year. Democrats in both the House and Senate made property tax relief a key issue during last year's election and during the legislative session.

Marquart's Senate counterpart, Sen. Rod Skoe, DFL-Clearbrook, said the veto means local governments will be forced to increase property taxes to pay for needed services.

"Governor Pawlenty has never demonstrated an understanding or awareness of the importance of local units of government to Minnesotans' lives. That is disappointing to me but not real surprising," he said.

Pawlenty's veto of the tax bill also means publishing company Thomson West and the Mall of America will not receive tax breaks for their respective expansions.

Daniel Jasper, a spokesman for the Mall of America, said mall officials hoped Capitol leaders would find a solution to the tax bill. "This $2 billion investment in Minnesota cannot sustain any delays. It is about families, jobs, and economic development," he said in a prepared statement. "The time is now."

A $39 million line of credit for the 2008 Republican National Convention in St. Paul is also up in the air since it was included in the bill. The funding was supposed to be in place by August and would be used if private fundraising for the convention falls short.

A spokesman for the governor said no other financing plans have been made.

While some are criticizing the governor for vetoing the bill, House Republican Minority Leader Marty Seifert of Marshall applauds him for sticking to his principles. Seifert disagrees with DFL legislative leaders' claim that including inflation in budget forecasts is sound fiscal policy.

"I think over time it's hundreds of millions of dollars per budget cycle it adds to the forecast," according to Seifert. "And the Legislature, for better or worse, does not do its job in terms of backing off the forecast and asking questions like, 'does this program deserve an inflationary increase?' They won't do it."

Several lawmakers, including Speaker Kelliher, expressed interest in having Pawlenty call a special session to deal with the tax bill. The governor has the power to call lawmakers back this year, but his spokesman played down the idea. Along with the veto, Pawlenty signed three other bills, approving the K-12 budget, the higher education budget, and a bill that funds the day to day operations of the transportation department. He used his line-item veto authority on seven items in those bills.

(The Associated Press contributed to this report.)

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