Political Notebook

Bad news for Wanamingo...

The final tax bill deal brings with it bad news for Wanamingo and several other cities hoping to get a piece of Rochester's sales tax money.

The Minnesota Legislature required that $5 million of the $139.5 million raised by extending Rochester's half-cent sales tax would go to 17 small cities for economic development. Voters approved the sales tax extension last fall. Some cities argued — including Wanamingo — argued they were accidentally left off the list. Other cities fighting to get included were Altura, Dexter, Grand Meadow, Mazeppa and Racine.

The tax conference committee approved language that requires the Rochester City Council to vote to give the money to the original 17 small cities. Otherwise, the $5 million would automatically go back to the city. It also limits them to giving the money to that existing list of cities.

Mailer targets Nelson for backing cigarette tax hike

A conservative advocacy group is targeting Rochester GOP Sen. Carla Nelson for supporting a hike in the state's cigarette tax.

Americans for Prosperity sent out a direct mail piece this week the states "Carla Nelson wants to raise our taxes... even more than Mark Dayton!" It goes on to state that "Not even Mark Dayton supports such a massive tax hike" and urges people to call her to tell her to "stop raising sales taxes on Minnesotans." Nowhere on the mailer does it use the term "cigarette taxes." A footnote in small print cites a bill she introduced that would increase taxes on cigarettes by $1.29 a pack to the same tax level in Wisconsin and use that money to help reduce the statewide business property tax.

Nelson said the ad is totally unfair and fails to recognize that her bill is revenue neutral  raising the cigarette tax in order to lower business taxes.

"I don't believe they have gained any traction," she said. "But it is rather mind boggling, quite frankly, that they would take on someone who has a record of being pro-business, pro-jobs."

Nelson is one of three state lawmakers who support various tax increases being targeted by the group, which was founded by conservative billionaires Charles and David Koch. The others are both Democrats from Edina — Rep. Ron Erhardt and Sen. Paul Rosenthal. The group's Communications Director Chris Van Guilder stood by the mailer. He said that Nelson's proposed cigarette tax is more than the 94-cent-a-pack tax increase proposed by DFL Gov. Mark Dayton. Even though Nelson's bill would cut business taxes, he said it would end up hurting middle-class consumers and businesses in border communities.

"We want lower taxes for businesses, consumers, middle class families and what her bill does is it raises those taxes and we oppose it," he said. 

Van Guilder declined to say how much is being spent on the mailers but said it is "significant." He said the group is also planning to use social media to urge their supporters to speak out against these tax proposals.

As for Nelson, she said she has already sent out an email to those asking about mailer and supporters who likely received it.In it, she calls the piece "absurd" and said she backs raising the cigarette tax to help reduce smoking — especially among children.

She wrote, "You know me — I am a strong proponent of lower taxes and less spending. I strongly oppose the multitude of anti-growth and anti-jobs tax hikes proposed in the Governor's budget. My bill would actually lower job-killing taxes in Minnesota and help keep teens from picking up a deadly addiction."

No plans to retool DMC bill before next week's hearing

During a press conference call with reporters this morning, Mayo Clinic officials were asked whether they planned to retool the Destination Medical Center in advance of Tuesday's hearing before the House Taxes Committee hearing. Its widely expected that project backers will face some tough questioning — particularly from House Taxes Committee Chairwoman Ann Lenczewski, he has said she has serious concerns with the proposal.

DMC Administrator Lisa Clarke said no changes to the bill are planned before Tuesday's meeting.

"We're going to have the conversation with the tax committee on Tuesday, and we will listen to what they have to say and have a good discussion at that committee. I think that committee is going to be very informative," she said. 

She added that Mayo Clinic is actively working to gather input on the bill and any changes to the proposal will be made as it goes through the committee.

During the phone call, project supporters continued to emphasize the importance of the project to ensure Mayo Clinic is able to remain globally competitive. The $6 billion plan would generate an estimate 35,000 to 45,000 direct and indirect jobs over the next 20 years. Dr. Bradly Narr, DMC's medical director, also addressed some of the concerns raised by senators earlier this week during a Senate Judiciary Committee about the total cost of the project when interest is factored in. The committee ultimately passed the bill without recommendation. A state fiscal analysis of the proposal estimates it would cost the state $1 billion in debt service over 33 years.

Narr said it is important to realize all the other bonding projects the state does involve interest.

"If we're talking about a stadium proposal that has $985 million in requested bonding, we know that that will eventually result in payments of $2.2 billion. We just need the language to be consistent between the dozens of different proposals that go before the state."

Do Rochester lawmakers 'owe their souls to the company store?'

In a recent blog post, Taxpayers League of Minnesota President Phil Krinkie made clear he is not a fan of Mayo Clinic's Destination Medical Center plan. He writes that the clinic's $6 billion proposal would turn Rochester into a company town.

He compares the situation to the 1950s country tune by Tennessee Ernie Ford called "Sixteen Tons" about a laborer who works all day loading 16 tons of coal. The song lyric's include "Saint Peter don't you call me cause I can't go, I owe my soul to the company store."

While these company towns have traditionally been thought of as small, rural communities, Krinkie writes that Mayo Clinic's proposal will do just that in the state's third largest city. But unlike the approach taken by mining companies in rural towns, Mayo Clinic is looking to do it by setting up an economic development zone. The clinic has pledged to invest $3.5 billion to expand its Rochester campus and leverage $2 billion in private investment as part of its proposal. The clinic wants $585 million in public funds to help pay for public infrastructure to support that expansion. A recent state fiscal analysis concludes that the total debt service for the bill could cost the state more than $1 billion.

Krinkie writes, "The simple reality of this proposal is to make Rochester a 'company town' and in this case the 'company' is the Mayo Clinic. All tax revenue will flow to the 'Medical Development Authority' and the Authority will spend the money the way the Mayo Clinic wants."

The former Republican lawmaker goes on to write that, "If you live in Rochester, you won’t have any choice but to work, shop, eat and partake in community activities, while all your income and sales tax dollars support the Medical Development Authority. Just like in the old days, there is no escaping having to support the company town.  Based on the members of the Legislature who are the key authors on the bill, it looks like they already owe their souls to the company store."

 

Nelson goes after 'little cigars,' backs cigarette tax hike

A Rochester lawmaker is helping lead the charge at the Capitol to raise taxes on cigarettes and go after so-called “little cigars.”

Assistant Senate Minority Leader Carla Nelson, R-Rochester, introduced two tobacco-related bills on Monday. One would boost taxes on cigarettes by $1.29 a pack so they are taxed at the same rate as they are in Wisconsin. The money raised by the tax hike would be used to reduce the statewide business property tax. The other bill seeks to get rid of a tax loophole that would require little cigars to be taxed as cigarettes. These products, which come in candy and fruit flavors, are taxed at a much lower rate than cigarettes because they have some tobacco in their wrapping paper. As a result, a pack of little cigars costs $1.50 versus more than $5.00 for a pack of cigarettes.

“Our bill simply says this is a cigarette and the research shows that if someone does not pick up smoking before the age of 20, they are much less likely to be addicted for life,” she said.

Both bills have bipartisan support. Nelson introduced them last year but they failed to pass the GOP-led Legislature. Supporters are optimistic that these bills have a chance of passing this year noting that DFL Gov. Mark Dayton's budget calls for a 94-cent increase on a pack of cigarette tax.

Talkin' taxes in Red Wing

Residents wanting to weigh in on Minnesota's tax system will get their chance tonight at a town hall in Red Wing.

Minnesota Department of Revenue Commissioner Myron Frans is hosting the event at 6 p.m. in the Red Wing City Council Chambers at City Hall. The goal is to brainstorm ideas for reforming Minnesota's tax system. This is part of a series of town halls being held across the state. Information gathered from these events will be used to help DFL Gov. Mark Dayton put together his own tax reform proposal.

There's been plenty of talk about taxes in the lead up to the upcoming legislative session. With DFL majorities in the House and Senate, the governor has a chance to push through his proposal to raise income taxes on the state's wealthiest residents. In a St Paul Pioneer Press article, the governor said he is also interested in extending the sales tax to services and lowering the overall rate to help provide property tax relief. He also wants to lower the state's corporate income tax rate.

I'm planning to cover tonight's town hall and will have a story on the ideas discussed.

Walz bucks party, votes to extend Bush-era tax cuts

1st District DFL Rep. Tim Walz was one of 19 Democrats that bucked their party on Wednesday and supported a Republican proposal to extend the Bush-era tax cuts for another year. Fellow Minnesota Democrat Collin Peterson joined Walz in voting to extend the tax cuts. The measure passed 256-171.

Democratic leaders have argued against extending the tax cut for the top 2 percent of taxpayers saying the country cannot afford it and the wealthy don't need it. Republicans counter that during a time of economic crisis, it's a bad idea to raise taxes on anyone.

Walz issued the following statement about his vote:

"Extending tax cuts for hardworking middle class Americans is something we can all agree on. Middle class families simply can't afford a tax hike or the uncertainty that goes with waiting until after November for Congress to act. While I support ending tax breaks for the wealthiest among us, the Democratic plan that would have accomplished this failed to add fairness to the estate tax to protect family farmers. With the current high price of farm land, I cannot in good conscious support legislation that could hurt our hard working farmers who are the backbone of the rural economy in southern Minnesota.

"Tax cuts for middle class families are too important to play politics with. Moving forward, we must work together and take a balanced approach that includes both smart, targeted spending cuts and increased revenues."

Senjem, Quam to address property tax concerns in West Concord

Two local Republicans are participating in a town hall meeting on Monday in West Concord to address concerns raised by citizens and local business owners about rising property taxes.

Sen. Dave Senjem, of Rochester, and Rep. Duane Quam, of Byron, will both be at the town hall meeting at 5:30 p.m. at the West Concord American Legion, 133 E. Main St.

The discussion is likely to center on the elimination of the Market Value Homestead Credit, which was approved by the GOP-led Legislature and DFL Gov. Mark Dayton as part of this year's budget deal. The program provided direct payments to local governments to subsidize local property taxes. Scrapping the program is expected to save the state $260 million.

To make up for the credit cut, lawmakers approved a homestead exclusion for homes valued at $413,800 or less. That exclusion reduces the tax base for cities. In small rural towns like West Concord, which has a lot of lower-priced homes, the tax change shifts the burden to businesses and those with higher-valued homes.

In October, Dodge County Finance Director Lisa Kramer said to make up for the lost tax capacity caused by the state law change, West Concord would need to raise its tax rate by 40 percent to bring in the same amount of money.

Democrats are blaming Republicans for supporting the tax change, which they say is forcing up property taxes across the state. Two former House tax chairs have vowed to push to restore the tax credit in the 2012 session. Republicans counter that it is up to local governments to set property tax rates and it is unfair to blame them. They also note the state often ended up stiffing local governments on the credit when it came time to pay the bill. Quam wrote a column defending those cuts that ran in today's Post-Bulletin.

 

Walz votes for GOP payroll tax holiday plan

1st District Rep. Tim Walz was one of ten Democrats to vote in favor of the Republicans' plan to extend the payroll tax holiday for one year.

Most House Democrats voted against the bill citing concerns with other provisions tacked onto the measure. That included language that would speed up construction of the Keystone Pipeline, which would carry oil from Canada's oil sands to the Gulf Coast. The bill paid for the tax holiday by extending a pay freeze for civilian federal workers for another year and reducing the government workforce. 

Walz issued the following statement about his vote:

"While this bill is anything but perfect, extending tax cuts for middle class families is too important to play politics with. This tax break will go directly into the pockets of hardworking families who will spend it at the local grocery or hardware store. I am sick of the political games being played in Washington. It is time to get things done. Tax breaks for the middle class will strengthen our economy and create jobs that will help us tackle the long-term national debt facing our country."

Also included in the bill is a provision that would allow some renewable energy grants that were part of the federal stimulus package to expire. Republican 2nd District Rep. John Kline supports scrapping these grants citing concerns about how the money could be used for a controversial wind farm in Goodhue County.

“This is a wind energy project Goodhue County citizens don’t want funded by taxpayer money the federal government doesn’t have,” Kline said in a statement. “Given the economic challenges facing our country, we cannot in good conscience use taxpayer dollars to subsidize industries that have failed to demonstrate proven results to help our long-term energy strategy.”

The bill passed 234 to 193. But the Democratically-controlled Senate is unlikely to pass this plan. President Obama has also threatened to veto a bill that includes the Keystone Pipeline language. If Republicans and Democrats fail to reach a deal on the payroll tax holiday it will end up costing the average American family $1,000 next year.

 

 

 

Walz backs tax hike on millionaires to pay for payroll tax holiday

In an interview yesterday, 1st District DFL Rep. Tim Walz said he believes it is critical that Congress extend the payroll tax holiday before it runs out at the end of the year.

"A tax on the middle class at this time would be catastrophic," he said.

According to estimates, the average family would see their taxes go up by $1,000 if the payroll tax is not extended. The big fight in Congress is how to pay for that tax holiday. Walz said he supports the idea of a 1.9 percent surtax on millionaires to pay for it.

"We think this should be extended. It's the right thing to do — especially for the working class who are trying to make ends meet, and those at the top that have experienced unprecidented growth can pay the surtax," he said.

Republican state Sen. Mike Parry, who is running against Walz, recently sent out a press release arguing it is wrong for Democrats to look at raising taxes on anyone at this time. He argues the tax holiday should instead be paid for with spending cuts.

"The problem with Washington is that Democratic politicians think it's acceptable to hold middle class tax cuts hostage in exchange for reckless, job-killing tax hikes on others," Parry said in a statement. "Our government is broke and our economy is sputtering because of irresponsible actions by Washington politicians. It's time for Congressman Walz to do the right thing and extend these middle class tax cuts by cutting wasteful spending."

Walz said he is frustrated that Republicans are suddenly concerned about paying for this tax cut but not others.

"The problem I have is a lot of folks on the other side of the aisle never said a word about the Bush tax cuts for years that have added $4 trillion to the deficit," he said.