Minn. plan to spur investment, jobs has support, but legislative leaders differ on how to pay

Disagreement over how to pay for Minn. jobs bill

ST. PAUL, Minn. — Gov. Tim Pawlenty and most Minnesota lawmakers want a bill that would spark investment and jobs in startup companies, historic buildings and the Mall of America expansion — but they’re hung up on how to pay for it.

A bill that would get the money by doing away with a gas tax credit for low-income taxpayers cleared the Senate Taxes Committee Thursday and could come up for a vote as soon as Monday. But the provision is opposed by the House Taxes Committee chairwoman, who said it would take from the poor to give a tax credit to wealthy investors.

The Senate panel removed money-raising provisions that would have squeezed tax scofflaws and nixed refunds for political contributions.

The House is also moving toward a Monday vote on a separate bill that would rely on higher collections from delinquent taxpayers, but Pawlenty’s top tax adviser said he isn’t sure if he can shake as much loose change out of them as lawmakers are expecting.

The House bill also would limit the amount of money available for historic renovation projects — a move opposed by Senate Taxes Committee Chairman Tom Bakk, a Democrat from Cook.

Both bills would offer tax credits to investors in small businesses and historic projects, allow the Bloomington megamall to go ahead with a planned expansion in phases instead of all at once and give local governments flexibility to use some future tax revenues for development deals. Ford Motor Co. would be in line for tax breaks if it keeps operating its St. Paul plant.

Revenue Commissioner Ward Einess said the projects are a priority for Pawlenty.

“The whole impediment now seems to be a mutually acceptable funding source,” he said.

Einess said lawmakers are already counting on his auditors to come up with $20 million in unpaid taxes for another part of the budget, and he’s not sure they can produce another $10 million for the job incentives.

The warning got a skeptical reaction from House Taxes Committee Chairwoman Ann Lenczewski, DFL-Bloomington, who said the state is currently owed $1 billion in unpaid taxes.

Meanwhile, Bakk found support in his Senate committee for scrapping a low-income motor fuels tax credit established in 2008 when the Legislature raised the state gas tax. He said the tax credit was poorly designed and can be claimed even by those who don’t own vehicles.

“We should put on our big-boy pants and own up when we do something like that and say it was a mistake,” said Sen. Linda Scheid, a Democrat from Brooklyn Park.

Lenczewski doesn’t support repealing the gas tax credit, which taxpayers are now claiming on their 2009 taxes. She said it would benefit the richest — so-called “angel” investors who make more than $300,000 a year — at the expense of the poor.

Despite their disagreements, Bakk and Lenczewski are both emphasizing the importance of acting on the bill.

“We all just can’t sit around on our hands and do nothing,” Bakk said.

Their goal has been to send it to Pawlenty on Monday before the Legislature breaks for Passover and Easter holidays.

“We are going to work it out,” Lenczewski said.