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Published March 23, 2011, 02:44 PM

MN Senate GOP Tax Bill Revives Local Aid Cuts

Proposal cuts gov't aid by $640M
Minnesota Senate Republicans proposed a tax package Wednesday that cuts business property taxes and provides about $40 million worth of property tax refunds to middle class taxpayers.

By: Associated Press,

ST. PAUL, Minn. (AP) — Minnesota Senate Republicans proposed a tax package Wednesday that cuts business property taxes and provides about $40 million worth of property tax refunds to middle class taxpayers, while reducing state aid to local governments by about $640 million and giving them more latitude to raise local sales taxes.

Democrats said the Republican-proposed cuts to local government aid programs would result in property tax increases on middle-income homeowners at a much higher rate than what would be offset by any refunds. Democrats also criticized a cut of about $105 million to the renters' property tax refund program, calling it a direct tax increase on Minnesota renters.

Included in the Republican bill is a roll-back of business property taxes, with a goal of phasing it out entirely by the year 2023.

Democrats and Gov. Mark Dayton have repeatedly insisted that cuts to local government aid would leave cities big and small short of funds for everything from police and fire protection to local infrastructure improvements and amenities like parks and libraries.

The Republican bill would authorize cities to seek voter approval for local sales tax increases of up to one-half of one percent to pay for capital improvement projects, including convention or civic centers, public libraries, parks and trails, highway bridges and overpasses, flood control measures, water quality projects, court and public safety buildings and municipal buildings.

Senate Republicans also proposed letting Minnesotans choose to pay more in state taxes, if they're so inclined. A line on tax returns would let individuals designate $1 or more be deposited into the state's budget reserve fund.

The Senate GOP tax bill has a major notable difference from a House Republican counterpart, in that it does not include about $220 million in proposed income tax cuts for low- and middle-income taxpayers that were a central feature of the package approved Saturday by the House Taxes Committee.

House and Senate negotiators will work to settle differences in the two bills, after which Republican legislative leaders and members of Dayton's administrations will begin budget negotiations. Dayton has spoken out strongly in favor of aid to local governments and has proposed an income-tax increase on higher earners, which Republican legislators oppose.

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