Dayton-GOP Alliance On Jobs Bogs Down In Details

ST. PAUL, Minn. (AP) — Democratic Gov. Mark Dayton says his top priority for the legislative session already past the half-way point is creating jobs. The Republicans who control the state House and Senate say jobs are their priority, too.

But at the Capitol, sharing good intentions has rarely guaranteed results.

Dayton has repeatedly called for a bipartisan jobs package, one that “takes your best ideas and my best ideas and turn them into jobs,” as he put it in his State of the State speech.

Dayton’s well-aired proposal resembles a stimulus approach, with three major prongs: a $775 million bonding bill, a proposal to build a new Vikings stadium and a $3,000-per-hire tax credit for any Minnesotabusiness that hires an unemployed person, a veteran or a recent college graduate. The administration, citing national studies, contends the two construction measures would produce thousands of jobs — on work sites, for materials suppliers and at places where people doing the building will ultimately spend their paychecks.

None of Dayton’s proposals has caught fire with legislative Republicans, who are dubious the number of jobs promised — particularly by the tax credit — would materialize. Instead, they favor aiding businesses with a mix of tax cuts and elimination of regulations — with the centerpiece proposal to reduce and eventually eliminate a tax that the state levies on every commercial property.

“I applaud the governor coming forward and realizing we need a better business climate to create jobs. But I don’t think his jobs package actually creates any,” said Rep. Greg Davids, R-Preston, who chairs the House Taxes Committee. The business property tax phase-out “does, because it leaves actual money in the hands of every business owner. It sends a message that we’re serious about wanting you here, businesses. We want you here and hiring people.”

Davids and the Senate Taxes Committee chairwoman, Sen. Julianne Ortman, are leading the phase-out charge; both call it their top priority of the legislative session. Their dual proposals differ in some details, but under both plans the business property tax would disappear within the next decade or so.

For a vet clinic in Scandia, the savings would be about $2,900 a year. But for a major manufacturer like Andersen Windows, it would mean a more than $70,000 break on its corporate headquarters alone, if the state property tax it was due to pay in 2012 was wiped out.

The tax now generates $880 million a year for the state. The proposals would draw it down slowly year by year, so the blow to the state treasury could be handled in stages.

The business property levy is one of the state’s newest taxes. It dates only to 2001, when then-Gov. Jesse Ventura and state lawmakers approved it as part of a broader plan shifting more of the public school funding burden from city and county property taxes to the state. The tax contains a built-in, automatic increase, and has gone in that time from collecting $540 million a year to the current $880 million.

Business property owners also pay local property taxes, but the state portion now averages about 30 percent of their total yearly property tax bills, Ortman said.

“That’s a huge amount of money being taken out of our economy and handed to government,” said Ortman, R-Chanhassen. “The goal is to let them keep more of this money, reduce their fixed costs and make them more likely to reinvest in higher wages, new jobs, capital improvements and equipment.”

Absent from the GOP proposals are any guarantees that Minnesotabusinesses would hire more people in return. Rep. Ann Lenczewski, DFL-Bloomington, was skeptical they would.

“This is like throwing money out of an airplane,” said Lenczewski, who chaired the House Taxes Committee when Democrats controlled the House. “You’re flying over the state and throwing money at all the businesses and shouting, ‘Hey, somebody please create a job down there!'”

Also uncertain is how to pay for what would be an eventual $1.6 billion hole in the state’s two-year budget. To cover the initial costs, likely a $50 million to $60 million drawdown, Davids first proposed eliminating a state tax credit that benefits renters. That met with fierce opposition, so Davids is now eyeing a slice of a recently announced state budget surplus.

The Dayton administration has declared that money off-limits while the state replenishes its budget reserves and starts to settle debt it has with schools. But Davids said everything is negotiable. “We’re the Legislature, we can do what we want,” he said.

Ortman said she would seek to cover at least the initial cost of phasing out the tax by reducing the size of the state workforce. “We had 22,000 unessential employees during the government shutdown, that to me says we can achieve some savings,” she said.

State Revenue Commissioner Myron Frans said even if Republicans identified a temporary replacement, Dayton would never support opening up a budget hole that would grow bigger year over year. Frans is working on a comprehensive tax proposal that he said Dayton would push in the 2013 session.

“The governor is obviously open to tax relief, but would want to approach it in a way that benefits all taxpayers — not just businesses,” Frans said.

Dayton proposes paying for his tax credit for job creation by closing a set of tax loopholes that benefit state corporations with foreign subsidiaries — a move Republicans oppose.

He has also recommended applying the state sales tax to purchases made over the Internet, which Davids is at least open to.

Whether any side gets any of what they want could come down to everyone getting something.

“The governor never says never,” Frans said of the possibility of Dayton accepting some items on the Republican wish-list. “The key is coming up with ways to enhance jobs, with a way to pay for it now.”

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • Belinda

    Jobs? I thought Dayton wants to increase taxes on the rich?

    You can’t be for both, they are mutually exclusive.

    • Tom

      @ Frank Talk

      Yes I do. It was called a luxury tax and it would affect yachts that cost $100,000 or more, and the people who bought those yachts would have been taxed another 10%, so that if a yacht cost $200,000 you would pay an extra $10,000 for the luxury tax. In my opinion if you can afford to open the piggy bank and shell out $200,000 or more for a “toy” then pulling another $10,000 from the piggy bank should not be a problem.

      What you failed to mention is that these people who were buying these yachts formed the Bermuda Corporation so that if anybody who wanted to buy the “big toy” could buy it offshore and avoid paying the sales and luxury tax. So you feel sorry for those people for having to pay an extra for their expense “toy”, so do you condone them going offshore to avoid paying anytype of tax?

      And the luxury tax was repealed in 1992.

      • Andy

        Long story short, over taxing the rich was a disaster.

        It stifles the economy. That is why the tax was repealed, they found they had less of our money to squander.

        • Tom

          @ Andy

          Do you remember what happened in the 90’s when Clinton raised the taxes on the wealthy?

  • Frankie

    If there is demand for their service there will be business regardless of taxes. If there is no demand for their goods and services then there will be no business, and no taxes

  • What?

    But Davids said everything is negotiable. “We’re the Legislature, we can do what we want,” he said

    Let’s remember that when we go to vote. What a slime ball.

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    […] Dayton-GOP Alliance On Jobs Bogs Down In DetailsDemocratic Gov. Mark Dayton says his top priority for the legislative session already past the half-way point is creating jobs. The Republicans who control the state House and Senate say jobs are their priority, too. … Read News […]

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