ST. PAUL, Minn. (AP) — Minnesota. Gov. Mark Dayton wasted no time Friday vetoing a Republican-crafted tax plan sent to him the night before that contained breaks for businesses but would have taken money from the state’s rainy day reserves.
The Republican-led Legislature gave the bill final approval Thursday and Dayton had until Monday to mull it over. But his action, which he long threatened, erased any drama.
The bill casts a shadow over an impending vote on a Minnesota Vikings stadium plan because some lawmakers suggested they would look more favorably on the stadium package if Dayton signed the tax plan.
“I made it clear I would not sign a bad tax bill for a stadium,” Dayton told reporters as he announced the veto.
The bill didn’t pass with enough support to suggest an override is feasible. Dayton said there’s still time to negotiate a new tax bill if Republicans are willing to allay his concerns.
Republicans who crafted the bill have argued that freezing a statewide property tax levy on businesses and relaxing some company sales tax rules would motivate new hiring.
It includes $52 million in tax relief this year, mostly by freezing an annual, automatic increase in the property tax the state directly levies on businesses. The cost of the tax relief rises to $139 million in the two years after that. A sales tax on major business equipment purchases would have been eliminated instead of the current practice where businesses apply for a rebate.
“This is a bill that would provide immediate relief to our small business owners and property taxpayers that are struggling through our economic recession,” said Sen. Julianne Ortman, R-Chanhassen said Thursday.
The legislation also includes tax credits for research and development projects, and an investor credit meant to foster investment in startup companies.
The bill had modest relief — $4.1 million — for homeowners stung by higher property taxes.
“More and more the property tax burden has been going on homeowners, renters and farmers,” Sen. John Marty, DFL-Roseville, said during Thursday’s debate before a 41-25 vote. “And here we’re giving all the relief to businesses.”
Dayton and Democrats complained that it would blow a bigger hole in the state budget in years to come. They also blasted its use of budget reserves to cover lost tax revenue, saying it will leave the state more vulnerable if the economy worsens.
With Dayton shooting down a key Republican priority, some including House Speaker Kurt Zellers said it could affect how individual lawmakers vote on Dayton’s much-sought Vikings stadium bill.
“If you either veto or disregard people’s bills, it is going to be hard for them to say, ‘Oh I’ll support your bill, governor, when you didn’t support my bill,'” Zellers said in a Thursday evening interview on KFAN Radio.
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