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15 legislature/stolle

By Matthew Stolle

mstolle@postbulletin.com

ST. PAUL — A day after negotiations took a near-disastrous turn, DFL and Republican legislative leaders signaled that both sides were close to reaching agreement on closing a near $1 billion budget gap and providing statewide property tax relief of up to $100 million.

"We’re creeping closer, and I would believe at this point that it would be somewhat safe to say that we’re too far along maybe not to reach an agreement," said Senate Minority Leader Dave Senjem, a Republican from Rochester.

Democratic leaders also expressed cautious optimism that a deal could be reached well within the remaining days of the session, which is scheduled to end Monday.

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"We’re working on property taxes and on closing that little bit left of spending reductions," said Assistant Senate Majority Leader Tarryl Clark.

But given the rocky nature of previous discussions between GOP Gov. Tim Pawlenty and DFL legislative leaders, no one was suggesting that budget talks were home-free.

Both sides indicated that reining in property taxes has dominated the talks. Pawlenty and DFL lawmakers are reportedly looking at increasing state aid to local governments, called Local Government Aid, plus imposing a property tax cap, to control property taxes.

Both sides indicated that reining in property taxes has dominated the talks. Pawlenty and DFL lawmakers are reportedly looking at increasing state aid to local governments, called Local Government Aid, plus imposing a property tax cap, to control property taxes.

The governor, who has made a cap central to any deal, earlier proposed a 3 percent cap, plus a growth factor for cities. He has reportedly upped that to 3.3 percent. Under one scenario, the city of Rochester would be allowed to raise its levy up to a ceiling of 5.5 percent.

"We’re just generally trying to say to Minnesota taxpayers that their property taxes are going to be reduced by so much money," said Senjem, who estimated anywhere from $70 million to $100 million in property tax relief.

Negotiators are also focused on plugging a $935 million spending gap projected in the second year of a $35 billion budget.

Currently, Pawlenty and GOP leaders are considering using $500 million of the state’s reserves. The rest would come from spending cuts primarily focused on health and human services and revenues generated by closing a tax loophole that benefits foreign operating corporations.

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Any deal would also likely be contingent on the preservation of Pawlenty’s pay-for-performance plan for teachers, called Q-Comp. DFLers want to take money from the program and put it on the per-pupil formula.

The status of other big-ticket items remained unclear. There was no agreement yet on whether to fund the Central Corridor light rail line.

Meanwhile, Mall of America officials warned Wednesday that they could delay or scale back a planned $2.1 billion expansion if a package of proposed state-authorized subsidies isn’t reworked before lawmakers close their session.

The mall’s owners balked at a proposal that would generate $370 million in public aid for the project through taxes imposed on retail sales, restaurant tabs and lodging bills in the city of Bloomington. The plan doesn’t allow the mall to divert money from a regional property tax pool as its owners wanted.

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