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House Taxes chair has strong reservations about Mayo Clinic plan

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Mayo Clinic
This undated photo, shows the Mayo Clinic in Rochester. The Mayo Clinic, Minnesota's largest private employer, is asking state lawmakers to commit more than $500 million toward an ambitious development project tied to the renowned medical center.
AP Photo/Rochester Post-Bulletin, Elizabeth Nida Obert

The chair of a key legislative committee said supporters of a plan that relies on more than $500 million to help the Mayo Clinic expand in Rochester should go back to the drawing table.

In a hearing Tuesday, House Taxes Committee chair Ann Lenczewski said she has deep concerns about the plan's financing.

Lawmakers have mostly been giving the Mayo Clinic bill a pass as it moved through committees that focused on job creation and government operations. But everyone knew the bill would face its toughest test in the House Taxes Committee, where lawmakers have to scrutinize details of the proposal to spend half a billion taxpayer dollars over the next 20 years to improve Rochester.

"The question is 'Is this a public subsidy that is worth it for our taxpayers and for all of Minnesota?" asks Lenczewski, a Bloomington Democrat. She said she is unsure the Mayo Clinic bill meets that test. Mayo officials hope to tap a portion of future income, property, corporate and sales taxes generated in the Rochester area. Those funds would be spent on new roads, bridges, transit, public spaces and parking.

But the overall size of the subsidy and that the state has never done this before is concerning to Lenczewski. She said she also wonders why Mayo and Rochester should get special treatment.

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"If they do their bonding, the state is going to have to do a lot less bonding. If they get their carve out of the income and sales tax, that isn't extraordinary - it's not new growth," she said. "Then all of the rest of us have to make up for it taxing our constituents more to pay for government services."

But Mayo Clinic physician Bradly Narr said the clinic needs a unique type of investment. He said Rochester would not be able to handle the infrastructure costs needed for the clinic's expected growth, and that state money would ensure that Mayo can compete with medical centers in Cleveland, Boston, Baltimore and Texas.

"We have a unique practice. It's very, very big. We see 350,000 unique patients per year. What's unique about it is it's in a very small community," Narr said. "Rochester is approximately 100,000 people. And those things bring about certain issues that our other competitors don't have to face."

Lenczewski said another tax committee hearing on the bill will likely take place next week, during which the committee will decide whether the proposal should be included in a larger tax bill. Lenczewski said that will not happen unless dramatic changes are made to the bill.

DFL Rep. Kim Norton of Rochester said she is willing to work with Lenczewski to address some of her concerns but said she does not intend to overhaul the entire plan.

"[Lenczewski] just doesn't agree that the bill says what we say it does," Norton said. "So that's really what we have to do is iron that out, prove to her that it does and get the fiscal staff to say that it does. And then it's a matter of if she's willing to do this new and unique form of funding."

Skyline of downtown Rochester, Minn.
The skyline of downtown Rochester, Minn., is seen Thursday, Feb. 14, 2013. The Mayo Clinic, Minnesota's largest private employer, pressed state lawmakers last month to commit more than $500 million toward an ambitious development project tied to the renowned medical center in Rochester. Mayo says the expansion will add between 35,000 to 40,000 jobs over the next two decades.
Alex Kolyer for MPR News

The fate of the Mayo Clinic bill may come down to end of session negotiations among Gov. Dayton, DFL House Speaker Paul Thissen and DFL Senate Majority Leader Tom Bakk. All three have said they want to do something for Mayo but have doubts about the financing plan. Dayton said that he is concerned about the price tag for the plan and suggests the size and scope of the project may need to be scaled back.

"I don't see why it has to all be financed up front. I think some of it can be financed on an ongoing basis, but I haven't looked at the details of what the request is and what the options are," Dayton said. "I'm certainly supportive. I think we've got to keep the Mayo Clinic thriving in Rochester and keep the state of Minnesota thriving as a result. But how we finance that is up in the air."