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Capital Chatter: Democrats making property taxes an issue - again

ST. PAUL -- Democrats make it clear they blame Republicans for rising property taxes, and will do that even louder in next year's campaigns.

They hope the charge sticks this time. Democratic-Farmer-Laborite candidates for years have said GOP budget cuts, or lack of tax increases, have forced local governments to raise property taxes.

It is happening again after a the Republican-controlled Legislature passed and Democratic Gov. Mark Dayton approved a new law that changed the homestead market value credit program, which basically cut state payments to local governments. Many local officials are making up for those cuts by raising property taxes by the amount they were cut.

Now, property owners are receiving their truth in taxation statements that show how much their taxes are going up.

"Minnesota homeowners and small businesses are about to pay the price for the legislative budget deal brokered by the majorities in the Legislature last summer," Sen. Katie Sieben, DFL-Cottage Grove, wrote in a column. "While they claimed loudly that the budget shortfall was solved without raising taxes, this is simply not true."

Sieben admitted that filling a $5 billion budget gap was hard, but she said raising taxes on the rich would have worked better.

In his own column, Rep. John Persell, DFL-Bemidji, said the eliminated program reduced taxes for 95 percent of homeowners.

"Rural Minnesota homeowners receive 55 percent of the state's homestead credit and nearly 60 percent of the $270 million in property tax increases will be shouldered by rural Minnesota," Persell wrote. "Folks in our area have been squeezed enough in recent years, and many -- especially those on fixed incomes -- can't afford higher property taxes."

While Democrats hope to use the tax increases as a campaign issue next year, some Republicans tried to get out in front of the situation.

House Tax Chairman Greg Davids, R-Preston, announced that Republicans plan to provide $80 million for people whose property taxes rose more than 12 percent.

Davids admitted, after being asked twice, that the money could result in rewarding local officials who raise property taxes the most, not a position Republicans normally would support.

Rural hospital worries

Sen. Al Franken worries that the so-called congressional "super committee" could create super problems for Minnesota's rural hospitals.

The Minnesota Democrat sent a letter to leaders of the Joint Select Committee on Deficit Reduction urging them to keep in mind that rural hospitals rely on Medicare reimbursements.

"Critical access hospitals serve some of our most vulnerable populations, including rural seniors, and ensure that emergency rooms and life-saving hospital services remain available to rural residents," Franken wrote. "Any reduction in critical access hospital Medicare reimbursements or changes to designation could seriously endanger the health of rural communities that depend on their services."

Hospitals with the critical access designation are in about 80 communities all across the state.

The 12-member super committee is supposed to reach an agreement before Thanksgiving Day on how to reduce the country's deficit. Otherwise, major cuts are to occur in federal programs.

U.S. senators and representatives have urged the committee to save all kinds of programs dear to their hearts.

Avoiding taxes

The Minnesota Revenue Department is investigating efforts by some Minnesotans to avoid paying motor vehicle sales taxes by setting up dummy Montana corporations.

"While the majority of Minnesota residents pay taxes when purchasing a vehicle, there is a small group that isn't paying their share," Revenue Commissioner Myron Frans said. "We are investigating these tax evasion activities and we will ensure that all Minnesotans follow the rules and pay the taxes that they owe."

Frans said that Minnesotans must pay the state's 6.5 sales tax regardless of where they buy the vehicle. Also, the vehicle must be registered in Minnesota.

The Revenue Department reports its Montana investigation is over Minnesotans setting up shell corporations to avoid paying taxes on motor homes that cost from $150,000 to $1 million.

People involved in such a scheme could face felony or gross misdemeanor charges in Minnesota.

The department has collected $230,000 in 22 cases of such tax evasion in the past year.

Tourism in Senate

American tourism is on the decline, while other countries are doing better, which prompted U.S. Sen. Amy Klobuchar, D-Minn., to hold a Senate hearing on the subject.

Thursday's hearing featured Explore Minnesota Director John Edman highlighting the importance of tourism in Minnesota's economy.

The hearing followed Klobuchar's introduction of the International Tourism Facilitation Act, designed to short shorten the time foreign tourists wait to receive U.S. visas.

"Tourism is about so much more than just hospitality," Klobuchar said. "It's a powerful engine for job creation in Minnesota and across the country, creating better opportunities for American businesses - from hotels and restaurants to local retail shops to recreation sites."

Tourism is Minnesota's fifth largest industry, providing $11 billion a year.

Klobuchar leads a Senate committee that oversees the tourism industry.

What's in a number?

The amount of money involved in a dispute over spending federal funds dwindled from $60 million to $6 million in a week.

A couple of weeks ago, Democratic Gov. Mark Dayton and Republican Sen. David Hann of Eden Prairie began a fight about whether Minnesota should spend federal health-care funds now or wait for legislative approval next year. At the time, Hann said $60 million was involved, while Dayton said it was $25 million.

A few days ago, the number shrank to $6 million.

A Hann aide said that Hann was including figures for various grants over a period of years for his original $60 million number. But some of those grants disappeared.

Dayton's smaller number was more accurate, but still included some grants that would come in future years.

The final $6 million figure only includes grants expected this year.

Hann stopped the grants because he had questions. But the Dayton administration has declared the grants "urgent," which means Minnesota can spend the money regardless of what Hann wants.

Senate gift exchange

A Jewish Minnesota senator is leading a U.S. Senate Christmas "secret Santa" gift exchange, the Washington Post reports.

Al Franken, D-Minn., and Sen. Mike Johanns, R-Neb., are credited with organizing the effort in "an effort to inspire collegiality."

It is the Senate first mystery-gift exchange. While the idea was for Democrats to give gifts to Republicans and vice versa, 21 Republicans and 37 Democrats have signed up.

"Otherwise, it works more or less like your own office's Secret Santa: $10 limit, gifts to be exchanged at an egg-noggy party in mid-December," the Post reported.

Davis works for Forum Communications Co., which owns the Daily Globe.

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.