Tax committee blur

The tax conference committee has been working late into the night, seen one tax bill receive a governor’s veto and has put together a non-controversial policy bill. With time running out on the session, its work still isn’t done.

HF885*/SF681, sponsored by Rep. Ann Lenczewski (DFL-Bloomington) and Sen. Tom Bakk (DFL-Cook), which would have raised $1 billion in taxes in the 2010-2011 biennium was vetoed by Gov. Tim Pawlenty May 8, less than six hours after receiving legislative approval.

Supporters said the bill was an attempt to save cuts to schools, hospitals and nursing homes by creating a new tax bracket for the state’s top earners, increasing alcohol taxes and adding a tax for excessive interest rates.

The anticipated revenue raised is $500 million less than in HF2323*/SF2074, the omnibus tax bill, also sponsored by Lenczewski and Bakk. It is currently still in a conference committee. The governor’s budget proposes using $1 billion in accounting shifts, and tobacco appropriation bonds that would have to be repaid over 20 years.

Of the $1 billion expected to be raised in HF885, $585.7 million would go into an account for E-12 education; $287.5 million for nursing homes and long-term care; $141.1 million for hospitals and $4.6 million for tax compliance.

A May 12 motion by Rep. Kurt Zellers (R-Maple Grove) to override the governor’s veto was tabled by House Majority Leader Tony Sertich (DFL-Chisholm), who called the motion a “stunt” and “premature.”

“We’re making progress,” Sertich said of talks with the governor. “I guess I look at the glass as half full. I would see a veto override as an option of last resort.”

“We’re not gonna wait until the wee hours of the last night of the last day to come down here and roll the dice,” Zellers countered. “If we’re going to vote to override, let’s do it here and now. If we don’t have the votes to override, let’s get back to the budget.”

HF1298*/SF1257, an omnibus public finance bill, also sponsored by Lenczewski and Bakk, awaits gubernatorial action. It was amended and passed 54-12 by the Senate May 13 and repassed 125-7 by the House later that day. The Senate added as many technical policy and non-controversial tax provisions as possible, Lenczewski said.

It also includes as much federal tax conformity as the state can afford that Congress has adopted since HF95, the House’s federal conformity bill, was signed into law earlier in the session, Lenczewski said.

Other inclusions are: disaster relief provisions for a St. Charles fire; home construction assistance for the flood-ravaged Red River Valley; and an emergency debt situation is provided for cities and counties that may lose local government aid, market value homestead credit and county program aid due to unallotment.

“This is the lifeboat, if you will, of the tax conference committee,” said House Minority Leader Marty Seifert (R-Marshall), a tax bill conferee. “I appreciate that all of the really controversial items were taken out. And I appreciate that members who had problems with certain things were allowed to have input. I would urge a yes vote, and I never imagined I would say that on a tax bill this year.”