By Mark Fischenich
MANKATO — Property taxes are likely to shoot higher if Gov. Tim Pawlenty doesn’t call a special session to provide tax relief, according to city officials. But top lawmakers and the governor’s office expressed doubt that a session will be called.
DFL legislative leaders doubt Pawlenty’s sincere interest in providing property tax relief, and Pawlenty doesn’t believe he can trust lawmakers to limit their agenda to the tax issue if he calls them into special session.
“If you don’t hear something’s going to happen by the end of the month of August, it’s pretty unlikely,” said Senate Tax Committee Chairman Tom Bakk at a forum in Mankato Wednesday. “... I have to tell you, I’m a little bit frustrated. I think a lot of people are.”
That frustration was evident among the more than 50 people to attend the event, which also included Senate Majority Leader Larry Pogemiller and was organized by Sen. Kathy Sheran, DFL-Mankato.
When Rebecca Sandon of Mankato said rising property taxes were threatening to drive people from their homes, Bakk said he was sympathetic.
“You better be,” Sandon said. “... It’s getting terrible for the seniors.”
Lawmakers and Pawlenty, campaigning a year ago, heard that same sentiment from voters and pledged to provide relief. But the Republican governor and DFL leaders failed to reach agreement on property tax relief during the session, and that will lead to higher taxes for owners of homes and other real estate, Mankato City Manager Pat Hentges said.
City officials are just starting their budget-setting process for next year’s budget, but Hentges said a rough look at Mankato’s needs versus falling state aid shows a $1.5 million shortfall. That could translate into a 14 percent increase in the overall property tax levy, he said.
If the Legislative tax bill had become law, additional state aid would have cut that deficit in half — greatly reducing the needed tax increase, he said.
North Mankato City Administrator Wendell Sande, who didn’t attend the forum, said the increase isn’t likely to be as large in his city but could still be substantial because the vetoed bill included $180,000 in additional aid for North Mankato.
To make up for that lost aid, the city would have to raise its levy by 4.3 percent, Sande said. The state’s inability to provide new funding for road projects could leave more of that burden on property taxes as well, he said.
“I’ve been speaking to business leaders in the community about the importance of both the tax bill and transportation,” said Sande, who added that some of those leaders promised to contact Pawlenty’s office to urge a special session.
The vetoed tax bill passed by the DFL-controlled Legislature provided $120 million in relief, including more than $30 million for low-income homeowners.
The governor said his major objection was a provision in the bill related to how state budget forecasts are calculated, saying he repeatedly warned lawmakers that he would veto the bill if the provision was included. He followed through on the threat after lawmakers adjourned on May 21, prompting talk almost immediately of a special session.
For two months, Pawlenty has said he isn’t inclined to bring lawmakers back but would consider a one-day session with a limited agenda that includes property tax relief. After Wednesday’s forum, Pogemiller said he and House Speaker Margaret Anderson Kelliher met with Pawlenty three weeks ago and little was accomplished.
“He’s not doing anything behind the scenes or anywhere else that would indicate that he’s interested,” said Pogemiller, DFL-Minneapolis.
Pogemiller also expressed doubt that Pawlenty’s primary objection to the Legislature’s tax bill was the method for calculating budget forecasts.
“That was an absolute fiction, an absolute fiction,” said Pogemiller, who speculated that the real reason was provisions that would have closed tax code loopholes that allow certain corporations and CEOs to avoid paying state taxes.
The revenue from both those provisions was used to provide much of the property tax relief in the vetoed bill.
Pawlenty spokesman Alex Carey said Pogemiller is wrong and that DFL lawmakers are to blame for the lack of tax relief because of their failure to remove the budget-forecasting provision.
Carey said Pawlenty is reluctant to call lawmakers into special session to remove that provision because he believes they are incapable of limiting themselves to that task.
“He doubts the DFL’s ability to limit the agenda,” Carey said.
He also said city officials may be using the vetoed state aid as an excuse to boost local taxes.
“A lot of the local leaders are just taking advantage of this fact just to raise property taxes,” Carey said.
Sara Hansen of North Mankato, speaking at the forum, said she’s simply annoyed that state leaders can’t set aside differences and get tax relief passed. Hansen recalled listening to a radio news story about the vetoed bill back in May.
“I was sitting there banging my head against the steering wheel thinking, ‘You’ve got to be kidding,’” she said. “We’re talking about people’s lives here.”