Cigarette tax to back stadium construction
ST. PAUL – Smokers will provide the backstop to Viking stadium construction funding, the governor and legislative leaders announced Thursday night.
If that is not enough, eliminating corporate tax loopholes will be a second backup to electronic pulltabs and bingo, which have failed to generate as much state revenue as expected.
Confirming a proposal Revenue Commissioner Myron Frans unveiled earlier in the day on behalf of the governor, the Democratic leaders said they agree on the plan. Gov. Mark Dayton, House Speaker Paul Thissen, DFL-Minneapolis, and Senate Majority Leader Tom Bakk, DFL-Cook, told reporters Thursday night that the proposal will be part of a tax bill expected to pass before Monday’s legislative adjournment deadline.
A cigarette tax increase and closing what some see as a corporate tax loophole would 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.
Frans said the tax increases already were being discussed, but the money now would be earmarked to fund the Vikings stadium if needed.
About $24.5 million estimated to come from a cigarette tax increase would go to plug a possible deficit in stadium funding for the next two years.
The plan would raise the cigarette tax from $1.23 per pack to $2.52. That is the same as Wisconsin’s rate, the highest of Minnesota’s neighbors.
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 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, where Thompson said schools and other state programs get money.
“Why are we talking about the stadium now?” said Senate Minority Leader David Hann, R-Eden Prairie, with the end of this year's session coming Monday.
When asked about the GOP allegations, an angry Dayton said the taxes are earmarked for a stadium and do not take money away from other needs.
“They want to screw up the project,” Dayton said of Republicans.
The stadium, replacing the downtown Minneapolis Metrodome, already is producing jobs, the governor said. Had the new stadium not been approved, a $400 million project with two office towers and other development would have gone to Des Moines, Iowa, Dayton said.
He called Republican opposition “political grandstanding.”
The law enacted last year to approve a nearly $1 billion stadium pinned the state’s $348 million contribution on electronic pulltab 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.”
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 of the new taxes. “The primary source still is charitable gambling.”
Don Davis of the Forum News Service contributed to this story