Revenue future: Minnesota's dilemma

A two hour meeting with Mankato businesspeople and Minnesota Commissioner of Revenue Myron Franz revealed some surprises.

Business people were willing to "give up" some exemptions like sales tax rebate on capital equipment, willing to have legal services taxed, willing to give up somebody else's property tax break, in exchange for reforming tax code, mostly away from the property tax.

Franz told the group that Gov. Mark Dayton was "committed" to Minnesota tax reform but wants to gather information from public meetings around the state, from Republicans and Democrats, and then make a proposal for reform in 2013.

He said Dayton was a "taskmaster" who works very hard and doesn't want his advisors to sugarcoat anything.

Franz produced the prop of a three legged stool with each leg representing property tax, income tax and sales taxes. The percentage that state gets from each was proporotional to the length of each leg of the stool. A few years ago, the stool was pretty even and it stood up.

Now, with property tax making up almost 40 percent of all government revenue, the stool fell over. Interesting visual.

Most of the feedback on what needs to be fixed centered around the property tax. One business owner said three of her properties had increases of 20 percent. A manufacturing plant faced an increase of 7 percent.

Another business owner said their taxes were up 43 percent.

The commissioner and his staff will be traveling to dozens of cities throughout Minnesota in the next year where they will meet with businesspeople and host evening Town Hall meetings for the public.

In a conversation with members of The Free Press editorial board after the meeting, Franz said the Legislature gives the revenue commissioner a number to increase collections by and it goes into the state budget forecast.

That number is $83 million for this biennium. So Frans has to hire staff and figure out where to find $83 million and Legislators even push for more. But it will be a number he has to answer to.

The meeting was organized by Greater Mankato Growth.