Dayton vetoes one Republican tax bill, lets second become law

By T.W. Budig, ECM Capitol Reporter

Monday, Democratic Gov. Mark Dayton signed into law a tax bill freezing local government aid (LGA) for larger communities, but vetoed the main Republican tax bill that contained tax increment financing provisions for a number of area communities.

Dayton had already this session vetoed an earlier Republican tax bill.

“If there is a lesson to be learned from this session, it is that genuine bipartisan collaborations produce successful outcomes,” Dayton wrote in his veto letter.

“By contrast, legislation, which the majority writes with no attempt at bipartisan cooperation, is usually unsuccessful. And attempts at pressuring me into accepting it after it has been passed, will almost certainly guarantee a veto,” Dayton wrote.

In his letter on the LGA bill, Dayton questions whether lawmakers really understood what they were doing when they voted for the bill. He depicts it as creating LGA winners and losers.

But the governor, despite his misgivings about the bill, signed it because of about $4 million in property tax relief it provides taxpayers who experience sharp property tax increases, he said.

But on the other tax bill, Dayton said it would have cost the state $46 million immediately and $73 million in the upcoming two-year spending cycle.

He argues that this added to the state budget deficit.

In addition to a one-year freeze on the statewide business property tax, the Republican tax bill included angel investment credits, a scaled-down version of the governor’s jobs credit for business hiring veterans — the governor also wanted to include recent graduates — and other provisions.

“It’s (House Tax Committee Chairman Greg) Davids’ lights,” said House Speaker Kurt Zellers, R-Maple Grove, last week of the scaled back tax bill.

Zellers depicted the the bill as the last chance for the governor to show he was interested in bettering Minnesota rather than just bashing Republican ideas.

House Majority Leader Matt Dean, R-Dellwood, said the tax bill was supported by business, the Chamber of Commerce, others.

“We think it is a very good bill he should sign,” said Dean.

But Senate Minority Leader Tom Bakk, DFL-Cook, said prior to Dayton’s veto announcement that he suspected the governor would veto the bill.

Dayton has been clear all session, Bakk said, that bills adding to the state budget deficit would not be received favorably.

Indeed, Bakk expressed surprised that Republicans hadn’t placed the various local tax provisions, such as tax increment financing provisions for the City of Bloomington relating to Mall of America expansion, into a separate bill as a backup against possible a veto.

Bakk thought it an example of poor governance.

Wayne Cox, of Minnesota Citizens for Tax Justice, applauded the Dayton veto.

“The partisan bill would have put $120 million in tax relief for business on the state of Minnesota credit card in the next three years — while Minnesota is already facing a projected $2 billion counting inflation in deficit for the next biennium,” he said.

But on the House floor, Davids pointed to various provisions in the tax bill that he said had been offered by House Democrats.

Indeed, Davids, speaking after the veto, was extremely critical of the governor.

“It was a shame. It was unfortunate. It was unnecessary,” said Davids of the veto.

“He just threw those veterans under the bus,” said Davids, referring to veterans job provision in the bill.

Republicans had taken to heart the governor’s position on the various tax provisions, Davids said.

“That bill was so well crafted,” he said.

Davids ascribed the veto to “pure politics” or dreadful advice that someone had given the governor.

He spoke of a “backlash” against the governor by construction workers and others dismayed by the lost jobs.

The LGA bill signed into law tax freezes 2013 city local government aid payments for larger cities at 100 percent of 2012 levels and for smaller cities with populations under 5,000 at 2012 or 2013 aid level, which ever is greater.

Rep. Melissa Hortman, DFL-Brooklyn Park, slammed the bill on the House floor.

“What’s the polite way to say, ‘Screw you,’” said Rep. Melissa Hortman, DFL-Brooklyn Park, of the perceived attitude of the Republican tax bill towards Northwest suburban communities.

The freeze meant the loss of $1.3 million in projected additional LGA for the City of Brooklyn Park, Hortman said.

But Davids said cities didn’t loss a dime of LGA under the freeze; they just don’t get the projected additional revenue.