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Income tax hike would fund more school aid

ST. PAUL - It was just last Monday when the Minnesota Senate approved an education funding bill, but now Senate Democrats want to add another $444 million.

That education funding bump and property tax relief require a $900 million income tax increase, Senate leaders say.

Democratic-Farmer-Laborite senators Thursday released a plan to spend $444 million more than a $794 million raise the full Senate approved on Monday. The new money would boost public school funding, keep public college tuitions down and expand pre-kindergarten programs.

On top of that, property tax relief will need more than $500 million, Senate Tax Chairman Tom Bakk, DFL-Cook, said.

The new education money would come from higher income taxes, Assistant Majority Leader Tarryl Clark, DFL-St. Cloud, said. Just how those taxes are raised - all taxpayers paying more, only the wealthiest or some combination - is to be debated in the Senate Taxes Committee today. The full Senate plans to decide the issue Saturday.

Senate Education Finance Chairman LeRoy Stumpf, DFL-Plummer, said money his committee originally had available would do little more than fill a gap in special education funding. The new bill would give schools a 2 percent increase each of the next two years - a $293 million bump.

"It will put in some additional dollars in a significant way," Stumpf said.

Gov. Tim Pawlenty reiterated his position that higher taxes are unacceptable.

"It's not personal," Pawlenty, a Republican, said of his reaction to Democrats' plans. "It's just that they have a governing philosophy that says it's OK to jack up taxes and jack up spending well into double digits. And I don't agree with that."

Sen. Keith Langseth, DFL-Glyndon, said Pawlenty needs to overcome a fear of raising state taxes and work with senators who want more money for education.

"I would sure think he could give on something," Langseth said. "Is he going to insist on his way on everything?"

Minnesota State Colleges and Universities system campuses could hold tuition increases to 3 percent a year under the new bill, Senate Higher Education Chairwoman Sandy Pappas, DFL-St. Paul, said. University of Minnesota could keep its tuition hikes to 5 percent a year, she added.

Without the funds, tuitions would rise far more, Pappas said.

The measure also would provide funding for expanding pre-kindergarten programs.

House Minority Leader Marty Seifert, R-Marshall, said Republicans feel tax hikes squeeze the state's wealthiest people, whom Seifert said already pay "an enormous amount."

Senate Minority Leader Dave Senjem, R-Rochester, said he fears Democrats' tax priorities could force the Legislature into a special session this summer to complete the next state budget.

House and Senate Republicans said they will prevent the Legislature from overriding Pawlenty's promised veto of state tax increases.

Sen. Bill Ingebrigtsen, R-Alexandria, said if Democrats want to increase education spending, they should propose using $629 million the Senate voted to put in state budget reserves.

Also in a Senate tax plan is a proposal to eliminate Pawlenty's Job Opportunity Building Zones program for rural economic development, as well as provisions for raising some business taxes while lowering others.


Senators on Thursday voted 40-25 for a so-called Car Buyer's Bill of Rights. The bill allows used car buyers to return vehicles within two days of purchase and sets minimum standards dealers must meet before claiming a vehicle is certified.

Opponents said the proposal will hurt small used car dealers, particularly in rural areas. Ingebrigtsen said the bill could prevent dealers and buyers from agreeing to a longer return period.

The Minnesota House on Thursday:

-- Passed 124-8 a measure allowing the Duluth access to a state investment fund to help fix its $300 million retirement benefit shortfall. The state fund is expected to yield a higher rate of return than the city's current investments. The bill, which received final Senate passage Wednesday, goes to Gov. Tim Pawlenty for his signature.

-- Voted 124-9 to toughen state mortgage lending laws. Aimed at prohibiting predatory lending practices, the bill by Rep. Jim Davnie, DFL-Minneapolis, limits lender fees and requires that mortgage lenders verify a borrower can repay a loan. Rep. Torrey Westrom, R-Elbow Lake, wondered whether lenders could be held liable if a borrower doesn't repay a loan.

-- Approved a bill by Rep. Dean Urdahl, R-Grove City, allowing for a nine-member board of Meeker County's economic development authority.

State Capitol Bureau reporters Mike Longaecker and Scott Wente contributed to this story.

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.