"ALEC" Draz and Winona area Republicans embrace change

Tired of blaming Dayton for tax hikes, Draz and Winona area Republicans embrace change

Posted by Sally Jo Sorensen 

In Minnesota tax hikes no surprise, the editorial board of the Fargo Forum writes:

Nobody should have been shocked this week to learn that elected officials representing Moorhead and Clay County gave preliminary approval to property tax increases. They did so grudgingly – Moorhead Mayor Mark Voxland cast the decisive vote on a divided City Council – and vowed that they’d keep scrutinizing the budgets to try to soften any tax hikes before final approval.

The city is forced to find ways to replace $827,000 in Local Government Aid and elimination of a homeowner tax credit paid to cities representing another $538,000 in lost revenue. The $1.3 million revenue gap is a direct consequence of the Minnesota Legislature’s refusal to raise statewide taxes – action that merely shifts the burden downstream to local governments. Cutting the city budget absorbs part of the gap, but the preliminary budget calls for an 8.3 percent increase in property tax, translating into $73 more in taxes on a $140,000 home.

Read the whole editorial which, like so many of Greater Minnesota's editorial judgments concerning the property tax shift, is as withering as an mid-September frost.  It leaves the legislative majority just as exposed as limp zucchini, defrosting in the garden:

So, while members of the Minnesota Legislature can crow about their achievement in holding the line on spending, local taxpayers repeatedly have been forced to pay higher property taxes – often cited by voters as the least popular tax. Ultimately, Minnesota voters will have to decide if they want that to continue.

The Mankato Free Press board observed that now Property tax boosts start with the state:

It will also be more difficult now for state legislators to say that property taxes are strictly a local decision and come from the local level. Clearly, the Legislature and the governor changed state law in a way that will likely cause local property taxes to rise, even if locals don’t increase their levies.

Looking to Minnesota's southeastern corner, it's not surprising to find ALEC model lawmaker Steve Drazkowski doing the sort of crowing that the Forum editors derided. For as the editors of the Winona Daily News recently pointed out with regard to local school levies, the corporate bill factory zombie has no shame.

Today's Winona Daily News reports in Lawmakers reconsider cutting property-tax creditthat Draz and his pals have broken with House GOP Tax Czar Greg Davids' gambit of blaming Dayton entirely for the elimination of the homestead credit. Now it's just tough love, perhaps the local government equivalent of torching a daughter's provocative panties.

Draz and other Southeastern Republicans aren't the ones doing the reconsideration mentioned in the headline. They're doing the sort of crowing scorned by the Forum and other editors:

"The credits make it difficult for our cities, counties, and townships to budget when they're not sure how much of a credit they'll receive from the state," said Jeremy Miller, R-Winona. "Everyone seems to agree that in the long run, the homestead exclusion will be better for the budget processes at the state and local level."

Miller must move in very small circles to think that "everyone seems to agree" that the homestead exclusion will be better. Perhaps he's merely riding the rhetoric of the world's smallest bandwagon. Howe has a slightly different cackle:

Sen. John Howe, R-Red Wing, and Rep. Steve Drazkowski, R-Mazeppa, agreed.

"By changing to an exclusion, the state's trying to be up front with counties and municipalities," said Howe. "When we make decisions on the local level, residents get better results."

But for Draz the Destroyer, it's pure anti-revenue template:

"We shouldn't make promises we can't keep with money we don't have, and that's just what reinstating the credits would do," said Drazkowski.

DFLers Ann Lenczewski and Paul Marquart proposed a bill this week to bring back the homestead value market credit.

Image: Chocolate Drazombie bunny, by Tild.

Related posts: "Breathtaking chutzpa": House Tax Czar Greg Davids haz it, DL Online sez

This is not what reform looks like: Faribault paper calls out legislators on end of Homestead Credit

Mr. Accountability: Greg Davids not ready to take hit on homestead credit property tax change

Posted by Sally Jo Sorensen on Sep 16, 2011 at 07:32 AM in Cities, Counties, Governor Mark Dayton,Minnesota legislature, Politics, Postmoronic Politics, State Legislature, Taxes |

The Next Debtpocalypse: Fiscal Meltdowns in the States

 

marctasman/Flickr

 

Inside the plan to gut state budgets and keep corporate America happy.

—By Siddhartha Mahanta

Fri Aug. 12, 2011 3:00 AM PDT

With the dust settling after the debt ceiling fight, Republicans—along with a few Democrats—are moving on to their next agenda item: blocking states from collecting millions in much-needed tax revenue from corporations.

The Business Activity Tax Simplification Act, or BATSA, passed out of the House Judiciary Committee in early July and is set to be taken up by the full House when Congress returns from its August recess. The bill, which is sponsored by Rep. Bob Goodlatte (R-Va.), would forbid state and local governments in the 44 states that collect corporate income taxes from taxing a sizable chunk of corporate profits. How sizable? The nonpartisan Congressional Budget Office, which scored a previous version of the bill in 2006, estimated that state revenue losses would explode to $3 billion annually within five years of enactment. Michael Mazerov, a senior fellow at the Center for Budget and Policy Priorities, says BATSA's current incarnation protects an even larger portion of corporate profits than the earlier bill, so state revenue losses could be even higher than the CBO projected. And here's the kicker: since no federal revenue is lost in the process, it's no skin off the backs of lawmakers in Washington.

The basic theory behind BATSA is that states shouldn't have the right to tax companies with permanent headquarters located in other states. The current bill allows for taxation of businesses that have employees within a state for more than 15 days, but that exception is actually very easy to avoid. Consider a bank with branches in multiple states that, like most major commercial banks, is an active player in the mortgage loan business. These kinds of banks often hire independent contractors to process mortgage applications. But under BATSA, a state wouldn’t be able to tax the bank for profits it reaped within its borders, because the contractors wouldn't count as "employees."

Congress has considered some version of BATSA every year since 2000. Each time, a coalition of groups—the National Governors Association, the Multistate Tax Commission, and a combination of state and local organizations and public employee unions—have managed to beat it back. But the tide could be turning. After the bill's markup in July—just the second time BATSA has made it out of committee—Americans for Tax Reform, Grover Norquist's anti-tax advocacy group, rejoiced.

Someone should tell the anti-tax activists, though, that their support for the bill could undermine corporate America's long-term financial stability. Without BATSA, ATR argues, corporations "that receive no direct benefit from the state"—i.e., those that are based elsewhere—are forced to bear a bigger share of the tax burden. But the roads, bridges, and other elements of basic infrastructure that those tax revenues pay for help transform states into attractive places for private investment. Lower corporate tax rates, while keeping more money in shareholder pockets, also mean less money for states to spend on physical infrastructure and the manpower to maintain that infrastructure. Over the long haul, that makes states far less lucrative environments for companies to set up shop. By helping businesses shirk their tax obligations in the short term, in other words, BATSA threatens their prospects for future growth.

BATSA isn't the only revenue-gutting bill making its way through the Congressional pipeline. House Republicans aim to bring another half dozen-or-so bills like it—collectively known as "state tax preemption" bills—that offer corporations massive carve-outs while slowly chipping away at states' abilities to collect taxes. Most of them are vaguely worded and benefit companies with multi-state presences—in other words, very big businesses. They include the Permanent Internet Tax Freedom Act, which would prevent states and localities from taxing Internet service providers, and the Wireless Tax Fairness Act, which establishes a moratorium on any new taxes or fees on cell phone service providers.

Lars Etzkorn, the program director at the National League of Cities, which advocates for the interests of municipalities around the country, says that state tax preemption effectively neuters local governments. "You're taking local accountability and local decision-making from where we think it belongs, and where there's a history of good financial stewardship, and instead having people in Washington… imposing their system, their will on local governments," Etzkorn says.

So even as businesses rail against overtaxation and crippling regulation, it turns out that they still rely on the federal government to protect them from states and municipalities. "Business people understand very well that they're creating new loopholes" with these bills, Mazerov says. When it’s convenient, it seems, even corporate America doesn’t mind a little nannystateism.

Duluth Feeling Impact of Possible Govt. Shutdown

Thu, 06/23/2011 - 6:15pm

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By Tracee Tolentino, FOX 21 News

DULUTH- The impacts of a possible Minnesota government shutdown hit Duluth on Thursday, as city employees received their potential layoff notices. 16 City of Duluth employees received word that if the government shuts down on July 1st, they may be out of a job.

The notice came from Minnesota’s "Department of Employment and Economic Development" to the Workforce Development Division here in Duluth.

“Employees were notified that they may be, and I stress may be, subject to lay off 10 working days from now which would be effective Friday July 8th,” said City of Duluth Chief Administrative Officer, Dave Montgomery.

It wouldn’t just be those 16 employees affected; the Workforce Development Division helps nearly 700 people with job placement, training, and other career assistance programs.

With an unsettled budget, this is all part of a much larger state issue at hand.

“We're still uncertain about LGA and how much and whether it will be impacted ultimately. We do know as part of a state shutdown that we're likely not to receive our LGA allocation,” said Montgomery.

That Local Government Aid allocation is about $15 million dollars, and further layoffs could be dependent on what happens to that money.

The city says they have a number of contingency plans, and are working on alternatives so if they can, they will try to avoid these tough layoffs.

However, all of this hinges on what happens down in St. Paul with the budget.