Dayton Says Wisconsin Owes Minnesota $59 Million

MILWAUKEE (AP) -- Minnesota officials said Thursday they were losing patience because Wisconsin still had not paid the $58.7 million it owes from an old tax-reciprocity agreement.

Under the agreement, taxpayers who lived in one state but worked in the other were allowed to file a single income-tax return. The agreement called for the states to reimburse each other, but Wisconsin always ended up owing Minnesota because more Wisconsin residents used the arrangement.

Minnesota Gov. Mark Dayton has asked his state's Department of Revenue to draft a letter demanding that Wisconsin pay up, Revenue Department spokeswoman Kit Borgman said Thursday.

"We understand they have cash-flow problems because so do we," Borgman said. "We do value the relationship we've had in the past. We just want them to honor the agreement."

Richard Chandler, the secretary of Wisconsin's Department of Revenue, blamed the delay on a breakdown in communication between previous administrations. He also said he was less concerned with how much was owed and by when and more with reviving an agreement that would spare taxpayers the hassle of filing separate returns.

"We're talking about an agreement terminated under two different administrations than the two in power now," he said. "From our point of view, it would be better to talk about it than to take unilateral action. The main goal is to figure out a way to make this work for taxpayers."

Chandler added that Wisconsin has always paid its balances plus appropriate interest and reiterated that conversations about a new payment plan should include discussions about restoring the agreement.

Cullen Werwie, a spokesman for Wisconsin Gov. Scott Walker, said the governor and Chandler were reviewing options for paying back the debt.

Former Minnesota Gov. Tim Pawlenty dropped the 41-year-old tax agreement in 2009 when the two states couldn't agree on a schedule for speeding up Wisconsin's payments to Minnesota.

Wisconsin officials have offered to pay the outstanding balance on July 1, but they haven't put that in writing, Borgman said. Without a written offer, Dayton asked Minnesota revenue officials to draft a demand for payment, she said.

The letter was still being written Thursday and could be sent as early as this week, she said.

While the letter will include a request for payment, it likely won't include any legal threats, Borgman said.

A message left with Dayton's office inquiring whether legal action was being considered was not immediately returned.

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