School funding issues part of Senate Tax Committee hearing

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By T.W. Budig
ECM Capitol reporter

Education and American Civil Liberties Union (ACLU) officials appeared before the Senate Tax Committee today (Thursday, March 24) to oppose an income tax tuition payment credit contained in the bill.

The credit could apply to tuition paid to send children to private schools.

Peter Noll of the Minnesota Catholic Conference endorsed the provision, pointing to Minnesota’s glaring student achievement gap as evidence the credit is timely.

“We’re not saying this is a panacea. But it’s a step in the right direction,” said Noll.

But others disagreed.

Carolyn Jackson of the Minnesota ACLU argued the tax credit is unconstitutional — that’s not true in all states but it’s true in Minnesota, she argued. “Tuition tax credits would work the same way as vouchers,” she said.

Scott Croonquist. Executive Director at the Association of Metropolitan School Districts, said his school districts are looking at $150 million in budget cuts. “We have nothing against private schools,” he said. But Croonquist argued the $11 million estimated cost of the tax credit was money public schools could use.

Minnesota Association of School Administrators Executive Director Charlie Kyte argued that the tax provision, if it became law, invited a lawsuit. Such a suit, if successful, could jeopardize other services provided private school students by the use of public dollars.

But Senate Tax Committee Chairwoman Julianne Ortman, R-Chanhassen, an attorney by profession, questioned arguments the tax credit was unconstitutional.

The credit isn’t an encouragement to parents to place a child in a private school, she explained.

It’s something that’s applicable after that decision has been made, argued Ortman. That is, “after the fact.”

Jackson indicated perhaps that argument could prevail in court. “Just for the record, when I lose, it would still cost the state money,” she quipped of court costs.

Other provisions in the Senate tax bill — which does not contain income tax cuts like the House Republican tax bill — includes a rollback and phase-out of the business property tax.

Business representativeness, such as the Minnesota Chamber of Commerce and Minnesota Business Partnership, expressed support for the phase-out.

Ortman stressed while the phase-out will eliminate the state’s business property tax cut, businesses will still be paying local property taxes.

Executive Director Patricia Nauman of the Association of Metropolitan Municipalities expressed support of a tax increment finance (TIF) deadline extension for projects covered under recent jobs-creation legislation.

She expressed concern for a fiscal disparity reduction provision in the bill — Ortman indicated the phase out was not a foregone conclusion — plus Nauman expressing “significant concern” over proposed local government aid cuts.

Nauman argued that LGA accounts for only three percent of the state budget but about a quarter of the cuts in the Senate tax bill.

Indeed, another city association represented suggested that although the Senate tax bill allows local sales tax authorization, upon voters approval, for a given number of reasons — civic centers, for instance — the funding would be less flexible that the LGA dollars.

Other provisions in the bill include a phased-in military pension tax exemption — former lawmaker and U.S. Navy fighter pilot Dan Severson testified that Minnesota has only about half of the military retirees it should. He attributed that to the tax climate.

House Tax Committee Chairman Greg Davids, R-Preston, between committee hearings and House floor session yesterday had a chance to review a Senate press release on their tax bill. “Oh, I like that,” he said of business property tax rollback. “That’s a good idea,” he said of another provision.

Davids indicated that the upcoming tax conference committee between House and Senate should go smoothly. “We’ll get some (provisions), they’ll get some (provisions). And we’ll call it a day,” he said. Davids would not comment on whether the House Republicans were willing to give up their proposed income tax cuts. “Well, I’m surely not ready to say something at this point,” he said.

But Davids spoke of putting together a good tax bill that in the “remote” chance that Democratic Gov Mark Dayton would sign it would be good for the state.

Dayton’s tax proposal contains income tax increases on wealthier Minnesotans and other tax increases.