Pawlenty may veto tax bill

Republican Gov. Pawlenty and DFL legislative leaders made separate trips around the state Tuesday to present their spin on the 2007 session.

In Pawlenty's view, one of his biggest accomplishments was fighting off DFL attempts to raise taxes. In DFL leaders' minds, the Legislature passed a reasonable budget that increases funding for schools, health care and property tax relief.

But that property tax relief is in question, because it's contained in a tax bill Pawlenty isn't inclined to sign into law.

"It's headed towards a veto -- headed in that direction, I'll put it that way," said Pawlenty Tuesday.

Pawlenty says he made it clear to DFL leaders that he'd veto the entire tax bill if it contained a provision requiring state finance officials to include inflation estimates in their budget forecasts.

Pawlenty says that would put government spending on "autopilot," because the revenue forecast would assume that every program would get an inflationary spending increase.

"I don't agree with that, philosophically. I think people should be forced to make choices, set priorities, set strategy and focus," said Pawlenty.

"It's a little bit hard to imagine why the governor won't just sign the bill," responded DFL House Speaker Margaret Kelliher.

Kelliher says she doesn't understand why the inflation provision is so objectionable to the governor.

"It's a little bit hard to imagine why the governor won't just sign the bill."

"Something that we had for years and years in Minnesota, that every former finance commissioner, former governors say this is the right financial tool to have in our toolbox," Kelliher said.

The Legislature removed inflation from state revenue forecasts as part of a budget deal in 2002, when Pawlenty was House majority leader and a candidate for governor.

If Pawlenty vetoes the tax bill over the inflation provision, he will also wipe out aid for fire victims in northern Minnesota, and tax breaks for business expansions for the Mall of America and publisher Thomson West.

"There's a lot of good stuff in the bill," said its sponsor, Sen. Tom Bakk, DFL-Cook.

Bakk says he hopes Pawlenty reconsiders his veto threat.

"The aid in there for the people up in Cook County that have been through this wildfire -- they need help," said Bakk. "And I'd be incredibly disappointed if the governor vetoed the bill, and this Legislature wasn't able to provide some aid to those people who've had the kind of a month that none of us would ever want to experience."

The bill also raises taxes on some Minnesota corporations that operate overseas. And it contains $39 million for a line of credit for the 2008 Republican National Convention. That guarantee was part of a bid package to attract the convention to the Twin Cities.

If Pawlenty vetoes the tax bill, he doesn't plan to call lawmakers back in special session. Unlike other budget bills, the tax bill isn't considered essential, and without it, the existing tax code will continue.

The governor says he's not planning to veto any other bills, although he could line-item veto specific spending items.

"I think we can work within this framework, with the exception of the blowup in the tax bill," said Pawlenty. "The bills largely reflect the discussions we had with the leadership, with some exceptions."

Pawlenty has three days to take action on the tax and spending bills. Barring a special session, lawmakers won't return to the Capitol until next February.

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