True North

Thanks to Gov. Pawlenty's insistence on capping property tax increases and his insistence on direct property tax refunds, the Legislature passed a Tax Bill that includes permanent property tax relief, caps property tax increases and puts rural DFLers in a difficult political position.

Highlights of the bill include permanent property tax relief based on ability to pay and a 3.9% cap on how much local governments can increase property taxes for the next 3 years. Under the provisions of this bill, local governments can't raise property taxes more than 3.9% each of the next 3 years.

The House DFL bill from last year was a far different creature than passed this year. In fact, the people that studied last year's bill said that it guaranteed a tax increase but didn't promise guaranteed property tax relief. Here's the outline on last year's property tax relief plan:

Marquart's proposal would cost $543 million, most of which would come from a new, higher income tax rate on couples earning more than $400,000 a year. The new property tax relief money would spend:

• $223 million to increase refunds.
• $133 million to lower school levies.
• $83 million to increase aids paid to local governments.
• $104 million to fill gaps while the property tax system changes.

Listen to that opening statement. In order to provide any property tax relief, the DFL would create a new income tax rate on small businesses. It's a safe bet that alot of those small businesses won't stay in Minnesota. It's a guarantee that this insane-sized tax increase will drive many businesses out of business. House Tax Committee Chair Ann Lenczewski says that everyone would benefit from the House DFL plan. The property tax relief isn't guaranteed, though:

However, that relief will not come if money is not available to fund it.

That property tax relief plan was doomed from the start because we were heading for a deficit. This year's plan is (a) guaranteed,(b) bigger than the DFL bill and (c) caps property tax increases the next three years.

The thing that taxpayers should keep in mind is that this bill wouldn't have happened if not for the negotiating skills of Gov. Pawlenty and the House GOP's insistence on direct relief.

In pure partisan terms, this is a major victory for the GOP. Their plan won out and it's a vastly superior plan for taxpayers. Don't think that that won't be mentioned during the campaign.

Just a sidenote: This is what happens when Republicans (a) stick together and (b) stick with their principles. When we're the party of ideas, we win. When we try and win on being the less disgusting option to Democrats, we lose. Rest assured that this campaign, at least on the local level, will be a battle of ideas.

You can take that to the bank, along with your property tax refund.

Comments welcome at LFR.