Democrats dismiss Republican tax rebate plan

House Republicans want to mail tax rebate checks to more than 1 million Minnesotans, a plan Democrats call an election-year gimmick.

Homeowners would receive checks worth 10 percent of their property tax bills, making the average check $205. They would arrive by Oct. 1, two weeks before the second half of most property tax payments are due - and slightly more than a month before the general election.

House Tax Chairman Phil Krinkie (R-Shoreview) said the proposal is the "simplest, easiest and most direct method" of providing relief to property taxpayers.

House Speaker Steve Sviggum (R-Kenyon) insisted that the checks only be written if the state Supreme Court rules the state can keep a 75-cent-a-pack cigarette tax.

The proposal is reminiscent of the "Jesse checks" from Gov. Jesse Ventura's term. During the Ventura administration, the state was running a large enough surplus that he and many lawmakers wanted to return money to taxpayers.

This time, the state has a $371 million tax relief account that would not fund on-going relief.

One problem with the checks is they depend on what the high court rules in a case it was scheduled to hear Tuesday.

There is no word on when a decision will be made, so the House GOP wants its tax rebate plan to go through only if the court allows collection of the tax.

The tax brings in about $370 million annually. If that is unavailable, there would no money for rebates.

While the rebate proposal was presented as a House Republican plan, Rep. Morrie Lanning (R-Moorhead) said House GOP members never have discussed it as a group.

"This is the first I've heard of it," Lanning said after receiving a copy of the news release.

"I'm not real happy about reading about this in an e-mail after it had been released," he said.

A one-time rebate "doesn't solve anything. I have some real questions about it myself," said Lanning, a member of the Taxes Committee.

Republicans hold a two-vote margin in the House, and if one or two of them don't support a bill, it cannot pass when Democrats oppose it.

The proposal doesn't address the real problem, said state Rep. Brita Sailer (DFL-Park Rapids). Property taxes have increased to protect the wealthiest Minnesotans.

According to a House research analysis, the "poorest" of these top 10 percent of Minnesotans paid income taxes on $14.5 million (adjusted gross income).

"We are protecting those people while we have to fight for everything," she said. "Does a $100 rebate help our roads or our schools?"

House Taxes Committee member, Rep. Paul Marquart, (DFL-Dilworth) said Minnesotans like to get money returned from the state, but they also know the difference between a "gimmick" and long-term property tax relief.

"It's an election-year gimmick that doesn't address the real cost of the rising property taxes," he said. "We need to give money back to residents, but it needs to be in a fair, responsible and permanent way."

Minnesotans outside the Twin Cities would be shortchanged under the House Republican rebate proposal, Marquardt said.

The average rebate for homes in northwestern Minnesota would be $101, Marquart said, while affluent homeowners in parts of the suburban metro would get $400 rebate checks.

Renters would not be eligible for rebates.

The chairman of the Senate Tax Committee said the GOP plan is designed to divert Minnesotans' view away from years of Republican actions that have pushed up property taxes.

"This is an election-year cry for forgiveness," said Sen. Larry Pogemiller (DFL-Minneapolis).

The Senate will approve a tax bill closing corporate tax loopholes, Pogemiller said, as well as increasing aid to cities as a way to allow them to keep from increasing property taxes.

Sviggum said the House will consider other types of tax relief, but will put its emphasis on cutting homeowners' taxes.

Senate Majority Leader Dean Johnson said he prefers permanent property tax relief to the one-time rebates.

"We need to reverse the misguided budget policies of the Pawlenty administration that have shifted too much of the cost of paying for state services onto the property tax, particularly school funding," the Willmar Democrat said.

Johnson said the GOP plan, to cost $307 million, would involve "excessive administrative costs."

Krinkie did not know how much it would cost, but he estimated about 50 cents a check. Krinkie and Sviggum said administrative costs would be low.

The cost of returning money to property owners during the Ventura administration was $1.4 million, according to Sailer. "It's not just postage," she added. "It's the time state employees have to spend figuring out who gets how much."

(Scott Wente of the Forum Communications Capital Bureau and Enterprise staff contributed to this story.)