ST. PAUL -- The state's bank account overflowing with cash, lawmakers of all political stripes return to the Capitol next month eager to slice state taxes.
That said, early overtures suggest it may take months of haggling to decide which taxes to cut and by how much.
Property taxes seem to occupy a spot on everyone's list of targets because Republicans, Democrats and Gov. Jesse Ventura generally agree they are among the least fair and most confusing of Minnesota's taxes.
Other taxes likely to get a close look are income, health care provider, estate, license tab and the so-called marriage penalty.
Democrats have fought far-reaching tax relief in the past, saying the state had more pressing issues that needed attention. Although most DFLers still think education and health care need help, they've leapt onto the tax-cut bandwagon.
"We are committed to permanent tax cuts," said Assistant Senate Majority Leader John Hottinger, DFL-Mankato. "The growth of the economy has justified that."
Those are words Republicans have been waiting years to hear. Expect a GOP drive for deep, permanent cuts in property, income and health care provider taxes.
"We want to have a smorgasbord of tax cuts," a giddy House Speaker Steve Sviggum said after the revenue forecast predicted a mammoth $3.01 billion surplus through 2003.
In 2000, Ventura and DFLers held to a Department of Finance forecast that suggested $549 million was available. House Republicans, who controlled that chamber last year and will again in 2001, wanted some one-time money such as that from the state tobacco settlement to be included, which would have increased the pot by about $350 million.
GOP leaders also wanted to stop the practice of writing bills with future budgets in mind. Ventura and DFLers had said the mix of House-approved tax and spending packages could lead to a state deficit down the road. Republicans pointed out that 17 consecutive projections over 8 years have shown surpluses.
"What was irresponsible in 1999 and 2000 turned out to be too conservative," said Sviggum, R-Kenyon.
Not only was the pot too small for Republicans in 2000, the way it was divided irked some who wanted much larger tax cuts. The stalemate was eventually broken by dividing the surplus three ways among House Republicans, Senate DFLers and Ventura.
Both Sviggum and Senate Majority Leader Roger Moe, DFL-Erskine, say that won't happen in 2001.
DFLers are likely to focus on property taxes.
Ventura also wants to overhaul the property tax system. Among his early proposals is for the state to take over school funding, essentially removing K-12 schools from the local property tax.
To accomplish that, the administration is considering a lower but broader sales tax, a statewide property tax on businesses and farmers and a shift of state aid from cities and townships to schools.
Another piece of the equation has already met with some opposition -- allowing cities to charge some tax-exempt organizations a fee to recover their costs for police and fire protection and other local services.
The proposed fees would help make up for the possible loss of $230 million in existing state aid now paid to cities to help hold down their property taxes. Charities say that would force them to cut programs and services.
Ventura also is eyeing permanent income tax relief and further reductions in car license plate registration fees.
Sen. Larry Pogemiller, who took over this year as tax chairman, said he's ready to work with Ventura.
"I'm going to work with the governor's ideas and give him a full field to play on," Pogemiller said.
Moe, Hottinger and other DFLers have said they expect Democrats' focus to be on property taxes, but Pogemiller offered no other details, saying simply: "I presume there will be tax relief and strategic investments." House Taxes Chairman Ron Abrams, R-Minnetonka, said Republicans are considering two other taxes.
Republicans may take another run at the so-called marriage penalty, in which some two-income households are taxed at a higher rate than a single person earning the same amount. Over the past two years, the Legislature has reduced the disparity, but it's not equal yet.
And the state inheritance tax might get a look, Abrams said.
Revenue Department officials have said eliminating the tax wouldn't provide much of a break because federal taxes would kick in where the state left off. Minnesotans receive a credit on their federal estate taxes for any portion paid to the state.
Minnesota estate taxes are due when an estate is worth at least $650,000 total.
In the past, Ventura also has expressed interest in eliminating the inheritance tax as a way to help farmers.
And, of course, a tax rebate appears imminent for the fifth straight year. About $924 million of the projected surplus is likely to be available for rebates next summer.
That would mean a check somewhere between the 1999 and 2000 rebates for most people.
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