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The House GOP gave Gov. Pawlenty the support he needed. As a result, they accomplished the improbable. They eliminated the forecasted budget deficit while prioritizing spending instead of by raising taxes. Here's the AP's report of the budget agreement:
Pushed to their session limit, Minnesota lawmakers drove through a bipartisan agreement late Sunday that will make future property tax increases less severe, help schools pay their bills, make it costlier to get a speeding ticket and provide a new park for nature lovers.
As if on cue, fireworks from the state's 150th anniversary celebration boomed outside the Capitol just before the final bill passed.
Under the state constitution, all bills had to pass by midnight Sunday. Top lawmakers and Gov. Tim Pawlenty spent the last few days negotiating around the clock to get a deal acceptable to all sides. At 9:30 p.m., the Senate signed off on the last piece, a tax bill containing relief for homeowners. The House ended its session at about 11:45 p.m., with the Senate following just minutes later.
The Legislature also passed bills addressing a nearly $1 billion state shortfall and authorizing borrowing to purchase land around Lake Vermilion for the park and put up state matching money for a second Twin Cities light rail line.
This wasn't inevitable but it was predictable. When Gov. Pawlenty line-itemed the Central Corridor project from the bonding bill, he gave himself a huge bargaining chip in the budget negotiations. That didn't guarantee that the DFL would do the right thing but it upped the odds of that happening.
The biggest winners in this, by far, are Minnesota's taxpayers. Taxes weren't increased. In fact, some taxpayers will see significant property tax relief as a result of Gov. Pawlenty's persistence on Minnesota taxpayers' behalf. Here's the AP's description of the property tax relief:
The property tax portion was central to the agreement. Under it, cities and counties won't be able to raise their tax levies by more than 3.9 percent a year for the next three years. The state will send them more than $60 million more next year, an amount that will climb in future years. And homeowners eligible for state refunds tied to their property taxes will have another $25 million to draw from.
House researchers say 73,000 homeowners will benefit from the additional refunds, including 10,000 who weren't eligible for the program previously. The maximum refund is $2,300. Pawlenty said the levy limit is projected to save taxpayers $78.5 million in 2009 and $460.5 million over the next three years. Pawlenty said homeowners shouldn't expect to see their tax bills fall, but they will see slower upticks after years of sharp spikes.
Tom Bakk, the Senate Taxes Committee Chair, voiced concerned for local governments:
Senate Taxes Committee Chairman Tom Bakk said it's a needed "timeout" from the increases many in Minnesota have experienced. But he said he'll be watching for ramifications on municipal government services.
"We are going to put some stress on local units of government with this," Bakk said.
The plan offers some leeway by allowing for greater increases in local levies if the money raised is used for new police officers and firefighters. Governments coping with spiraling mortgage foreclosure rates could also get some wiggle room.
TRANSLATION: Governments, not taxpayers, will have to go on diets.
That's enough to make a conservative smile.
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