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Farm tax cancellation not part of special legislative session

Minnesota House Speaker Paul Thissen, left, and Senate Majority Leader Tom Bakk announce there will be a disaster relief-only special legislative session Sept. 9. Behind them during the Wednesday, Aug. 21, 2013, announcement are Republican leaders Sen. David Hann and Rep. Kurt Daudt. (Don Davis/Forum News Service)

ST. PAUL -- Republicans who essentially set the agenda for a special legislative session said Wednesday that it was more important to repay schools than to overturn a new tax affecting farmers.

So a Sept. 9 Minnesota Legislature special session will only deal with funding disaster recovery, leaving intact a tax that began July 1 on farm implement repairs.

The session's goal is to pass an estimated $4.7 million in aid for 18 counties scattered around the state affected by June 20-26 storms and floods and another $1 million for Nobles and Rock counties in southwestern Minnesota that need more money after a massive April ice storm.

Democratic Gov. Mark Dayton insisted that the four top legislative leaders, Democratic and Republican, sign off on the agenda for the special session. All agreed about the disaster aid, but Republicans wanted to overturn several taxes the Democratic-controlled Legislature passed in May.

Rep. Jay McNamar released the following statement in response to the announcement:

"I'm glad we're going to be able to get some help to communities like ours that were hit by the storms earlier this summer. It's important that DFLers and Republicans continue our proud history of working together to provide disaster relief. I am personally disappointed that no agreement was reached to repeal the sales tax on farm equipment repairs. It's my hope that we can find a solution during the 2014 legislative session to help our hard-working farmers and agriculture producers."

Dayton said he would consider the broader tax action only if Republicans gave him specific places they would get money to replace revenue lost if taxes were eliminated. Republicans, meanwhile, said they were ready to do that, but they decided Democrats were not serious about getting rid of the taxes.

Because GOP leaders would not sign off on the farm tax repeal, the decision to limit the session to disaster aid came down to them.

House Minority Leader Kurt Daudt, R-Crown, said the final decision was between giving farmers a $2 million-plus tax break a month and putting that money toward repaying schools' funds that the state borrowed from them.

"There really isn't enough money to pay for both," he said.

Dayton had said he wanted the farm tax elimination to be retroactive, so taxes paid so far would be refunded.

On Wednesday, the governor said he did not know if he could seek refunds if the tax is repealed when legislators return to regular session Feb. 25. In fact, he said he needs to check future revenue forecasts before deciding if he can support overturning any of the taxes enacted this year.

The special session is to begin at 10 a.m. Sept. 9 and wrap up by the end of that legislative day, which law defines as 7 a.m. Sept. 10. Legislative leaders said hearings on the disaster relief bill will come in the days before the session.

New on Wednesday was the decision to include $1 million for the southwestern Minnesota ice storm.

The storm was April 9-11 and layered the Cottonwood, Jackson, Murray, Nobles and Rock counties with ice. That, coupled with a subsequent snowstorm, left much of the area without power for days, and in some cases, a week. Up to 50 percent of trees in Worthington alone were affected, with many being cut down.

Lawmakers already put $1.75 million of state money into ice storm recovery efforts. Federal dollars are covering most of the damage, estimated at more than $26 million.

The main work of the special session is to fund the state's portion of recovery from the June storms in Benton, Big Stone, Douglas, Faribault, Fillmore, Freeborn, Grant, Hennepin, Houston, McLeod, Morrison, Pope, Sibley, Stearns, Stevens, Swift, Traverse and Wilkin counties. Preliminary surveys show nearly $18 million in damage to public infrastructure.

The federal funds are limited to state and local governments, not for home or business damage.

When legislative leaders announced the special session deal Wednesday, they refused to say why the farm tax repeal fell off the table. But it did not take long for that to change as the two sides blamed the other.

Senate Majority Leader Tom Bakk, DFL-Cook, said Republicans would not sign an agreement setting up a special session with just one tax overturned.

House Speaker Paul Thissen, DFL-Minneapolis, first suggested that the farmer tax, which began July 1, be repealed during the special session. Bakk and Dayton soon agreed.

Republican leaders also said the tax should be repealed, but wanted a variety of other new taxes also killed.

Prime among the GOP targets was a tax due to begin in April on goods stored in warehouses. Republican and business leaders said the tax, even though it has not begun, was forcing some firms to delay business decisions.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.