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Tax bill dies after Dayton refuses to sign it

ST. PAUL — Area Republican said they were deeply dismayed by DFL Gov. Mark Dayton's decision last night to pocket veto a $260 million package of tax cuts.

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House Speaker Kurt Daudt calls on the Gov. Dayton to sign the tax bill during a press conference Monday. Dayton declined to sign the bill before midnight, however, effectively vetoing it.

ST. PAUL — Area Republican said they were deeply dismayed by DFL Gov. Mark Dayton's decision last night to pocket veto a $260 million package of tax cuts.

"Minnesota loses in this. The children, the senior citizens, the veterans, the schools, the farmers, the small businesses all lost last night when this bill went down," said House Taxes Committee Chairman Greg Davids, R-Preston.

But local Democrats defended the governor's decision not to sign the bill by Monday's midnight deadline because of a $100 million wording error.

"The tax bill was put together very hastily and brought to the floor very hastily and had very little debate. It's not too surprising to me that it had a $100 million error in it, and I think (the governor) was absolutely right to let it expire," said Rep. Tina Liebling, DFL-Rochester.

Dayton had vowed he wouldn't sign the tax bill unless lawmakers agreed to fix the wording error and to put up extra money for some of his funding priorities such as projects at the state's public universities and a pair of state investment programs. The doomed tax bill included property tax cuts for businesses and farmers. Also tucked in the bill were tax credits for graduates with student loan debt, parents who contribute to their children's 529 college savings plans and families who pay for child care.

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Dayton is held a press conference this morning to discuss his decision not to sign the bill.

The governor's refusal to sign the bill comes amid discussions with legislative leaders about calling a special session to pass a $1 billion public works bill and transportation funding. The failure of the tax bill means that tax cuts will also be on the table when it comes to special session negotiations.

The governor has said repeatedly he was deeply concerned about the drafting error in the tax bill, which would have put more than $100 million in taxes on charitable gambling in jeopardy. The state is counting on that money to help pay its share of the Minnesota Vikings' new stadium.

Davids said the drafting error is a "red herring," arguing it could easily be fixed by him writing a letter as chairman of the tax committee about the Legislature's intent. Republican House Speaker Kurt Daudt also told the governor House Republicans would support fixing the language in a special session.

But Rochester DFL Rep. Kim Norton is skeptical of claims that the drafting error could be fixed with a letter. She recalled when lawmakers learned of a major error in the Destination Medical Center law that would have required $12 billion in private investment before all of the state match could be tapped — double the amount lawmakers had intended. At that time, Norton said the state's attorney general told lawmakers a letter spelling out legislative intent wouldn't suffice. The law had to be changed.

Norton said she's still hopeful that the governor and legislative leaders can come together to agree on terms for a special session.

"We have an opportunity now to pass a transportation bill, to pass a good bonding bill, to fix that error in the tax bill and maybe get a pension reform bill out," Norton said. "This can be done quickly and the work of the session doesn't have to be for naught."

But Republicans said the governor's refusal to sign the tax bill makes it even more difficult to reach a deal on a special session. GOP House Speaker Kurt Daudt on Monday accused the governor of using tax relief as leverage to squeeze more spending out of lawmakers.

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"There's no way to look at this other than the governor is holding the tax bill hostage," Daudt said.

Sen. Carla Nelson, R-Rochester, said she was disappointed the governor chose not to sign the tax bill. She said she still wants to see a special session but worries that Dayton's actions will make getting that done even harder.

"This (tax bill) was a hard fought compromise," Nelson said. "For the governor to just veto it, I think, is really dangerous."

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