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Cigarettes could back stadium construction

A new Vikings stadium would feature large glass panels. It is to be built in downtown Minneapolis and open in 2016. (Submitted Photo)

ST. PAUL -- Money from cigarette and corporate taxes could be earmarked for a new Vikings stadium, just in case.

The taxes could be backup sources if other revenue sources continue to fall short, though supporters say they hope money from electronic pulltabs and bingo will be enough to fund stadium construction.

A joint House and Senate tax committee tentatively agreed Thursday to the framework of the plan from Gov. Mark Dayton.

About $24.5 million estimated to come from a cigarette tax increase would go to plug a forecasted deficit in the stadium funding for the next two years.

If the electronic pulltabs and bingo revenues continue to lag, the state could dip into funds gathered from closing what some see as a corporate tax loophole to cover the difference.

Revenue Commissioner Myron Frans, who presented the plan to the tax committee, said the tax change and cigarette tax increase already were proposed, but the money now would just be available to fund the Vikings stadium if needed.

Dayton's plan would raise the cigarette tax from $1.23 per pack to $2.52 per pack. That is the same as Wisconsin's rate, the highest of Minnesota's neighbors.

The one-time cigarette money set aside for the stadium would come from a tax on existing inventory, Frans said. It is a common practice by the state when such a tax, which is assessed on wholesale transactions, is increased, he said. That helps prevent retailers from stockpiling cigarettes before the tax hike takes effect.

Senate Tax Chairman Rod Skoe, DFL-Clearbrook, emphasized the committee only adopted the concept of the funding plan, but has not agreed on a cigarette tax increase rate or other details.

"We want to send the message that we want to get this done this year," House Tax Chairwoman Ann Lenczewski, DFL-Bloomington, said.

Closing the corporate tax loopholes would bring in about $26 million in the first year and $20 million annually after that, Frans said. Businesses now can avoid some state taxes by attributing sales to affiliates in other states, he said.

"It may never be used," Frans emphasized. "The primary source still is charitable gambling."

The law enacted last year to approve stadium construction pinned the state's $348 million contribution on electronic pull tab and bingo tax revenues.

"We've been disappointed with the rollout and how long it's taken," Frans said, but "we hope the original source will continue to grow."

Senate Majority Leader Tom Bakk, DFL-Cook, said the Dayton stadium funding proposal will be included in the tax bill to pass this weekend or Monday.

Bakk, a former Senate tax chairman, said he expects the tax conference committee to work into the wee hours of Saturday morning and for the bill to come up on the House floor later Saturday.

Republicans, who were not involved in drawing up the backup stadium finance plan, complained that the Dayton proposal would take money away from schools and other state needs.

Sen. Dave Thompson, R-Lakeville, said Dayton has promised not to use general tax dollars to fund stadium construction. The funds from the cigarette tax and closing tax loopholes would go to the state's General Fund with the knowledge that they can be used for the stadium.

"Why are we talking about the stadium now?" Senate Minority Leader David Hann, R-Eden Prairie, said, with the end of this year's session coming on Monday.

Stadium funding is just one of many pieces the tax committee must include in a final plan.

Reporter Don Davis contributed to this story.