Republicans Put Forth Bill To Cut Spending

Wednesday, April 6th, 2011 at 6:08 am

The debating in St Paul continued yesterday. Republicans and Democrats in the State Senate were clashing over how to find the balance between providing government services and encouraging economic growth. In the end, Republicans passed a tax bill they said would businesses grow and prosper.

Approved on a party-line vote of 37-26, the bill cuts spending by $580 million, which is aimed at bringing down the state’s $5 billion budget shortfall. The bill eliminates the statewide property tax on businesses entirely over the next dozen years and reduces aid to local governments. The bill also trims a property tax refund for renters.

Sen. Geoff Michel, a republican from Edina told the Associated Press the move was necessary because: “There are legislatures and governors around this country lowering taxes, making their states more competitive for their employers, we need to engage in that competition.”

The debate grew heated as Democrats repeatedly tried (and failed) to include income-tax hikes on the state’s wealthiest taxpayers; a tenet supported by Gov. Mark Dayton. Republicans also tried to close a tax provision that shields Minnesota-based companies from paying taxes on foreign profits.

Democrats suggested greater tax collections could block property tax increases and the higher taxes on renters, or be used to avoid cuts to social services that benefit the poor and disabled.

The Democrats say the “no tax increase” mantra is misleading because scaling back aid programs for local governments will put massive pressure on Minnesota cities and counties to turn to property tax hikes in order to pay their bills.

Republicans said that’s a decision better made at the local level, and county officials should be reducing their budgets too. They believe Minnesota’s tax climate has been a burden on businesses for too long, and predicted that efforts to relieve it would result in growth, innovation and jobs.

Republicans voted down or declared out of order numerous DFL efforts to tinker with the bill’s tax provisions, but the Democrats have a likely ally in Governor Dayton, who has said he wouldn’t sign on to such a budget fix, because it doesn’t include both spending cuts and some new revenue sources.

Officials from the state Department of Revenue have reported that the Senate tax bill would result in about $600 million in local property tax increases in the next three years.

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