Transportation debate turns to … property taxes?

Thursday’s House session on the massive transportation/transit bill turned ugly early, with staunch no-new-tax Republicans sniping at both minutia in the bill and the DFLers and some Republicans who supported it. No surprise there: A $6.6 billion package that featured the first gas-tax increase in 20 years and a metrowide sales-tax bump was sure to ruffle conservative feathers in the DFL-dominated House.

But the odd thing was, for about 20 minutes the debate centered on property taxes, not any gas or sales taxes or fee increases or a host of other revenue schemes larded into the bill. It was sort of like that old Rodney Dangerfield joke about going to a fight and seeing a hockey game break out.

This came about when Rep. Paul Marquart, a DFLer from Dilworth, circulated a memo printed on salmon-colored paper from the House research department. The missive showed a number of figures related to state and federal funding for roads and streets since 1990, in relation to what local counties and municipalities spent out of their own pockets for such infrastructure, in relation to the increase in local property-tax increases during that period of time.

The point was to show what every Minnesota homeowner knows all too well: Property taxes have skyrocketed this decade.

44 percent in four years
“Go to the last page,” Marquart urged his colleagues. “You can see that property taxes have increased 44 percent the last four years.”

And, in fact, that is what the table showed. It also showed that property taxes jumped 134 percent between 1990 and 2005, and “own-source spending” — what local governments spend for streets and roads out of a host of monies not necessarily dedicated to transportation — increased 128 percent at the same time. But “growth in federal and state aids” increased by 65 percent during the same time period, and only 10.9 percent from 2000 to 2005, the most recent year that data is available.

“This bill is not only about transportation funding, but it goes to relieve property taxes,” Marquart said, in a nifty bit of spin the DFL might want to adopt when it comes time to override Gov. Tim Pawlenty’s veto. “It’s new funding for roads rather than relying on property-tax payers to redo roads and streets.” 

His Republican brethren weren’t buying it. “It’s a nice speech, and I know your passion for property tax relief,” Paul Kohls, a GOPer from Victoria, countered not-quite-sincerely to Marquart. “And it’s a nice salmon- or pink-colored sheet. But look at the white sheet, which is House File 2800. … Tell me where it says taxpayers are going to get a dollar-for-dollar reduction, because I can’t see it.”

Kohls then introduced an amendment to the bill, adding, “Any tax increase in this that provides funds to a local government unit must be matched by a dollar for dollar reduction in property taxes by the local government unit.” The amendment failed 98 to 34.

Whither local government aid?
The nice bit of theater on both sides reminded me of an interview I had before the legislative session with Rep. Neil Peterson, a Republican from Bloomington who favors a gas-tax increase and voted for the transportation bill Thursday.

Peterson was making a case that rural lawmakers were hearing from the counties and municipalities that they represent, urging them to vote for the gas-tax increase because their own money for roads — that “own-source spending” in the Marquart memo — was drying up. I suggested to Peterson that what these people really needed was a restoration of funds to local government aid (LGA), a state program that gives money to county and city governments for any number of things.

Peterson chuckled: “That’s a whole different food fight. The gas tax is easier than that, because it’s got momentum; there’s been so much conversation about it.”

Pawlenty famously cut the LGA funding his first year in office, to the cries of many local leaders. And late last year, before the session started, a collection of mayors held a media conference at the State Office Building on the Capitol grounds, calling on Pawlenty to restore the funding. Good luck.

During the transportation debate, Marquart walked by some reporters and cracked, “What’s with a debate about property taxes?” I took the chance to ask him: Does the gas tax do the work that LGA would, without opening a whole other can of worms?

Cities have discretion on LGA

“No,” Marquart replied. “This is not at all about LGA.” LGA, he pointed out, does not necessarily go to improving roads — it’s up to the cities to spend it however they see fit.

“This is about getting dollars going to transportation and transit,” he said. “We got a little off base today. This is about a transportation bill that will relieve property taxes.”

Marquart was still a bit in spin mode. But he also indicated that he knows resorting local government aid funding isn’t likely this session.

Will the Legislature even get to the LGA debate?

“We’re hoping,” Marquart said, exhaling, pointing to the state budget forecast coming next week. “We were going to have a fun day of hearings on LGA, but the big concern is what does the deficit look like?”

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