ST. PAUL — With only 25 minutes left before the Legislature's midnight deadline last Monday, Sen. Dave Senjem still had hope that the Destination Medical Center property tax relief bill would pass.
That's when Senjem walked up to Senate Majority Leader Tom Bakk on the Senate floor and implored him once again to help get the measure passed, which would ensure Rochester property owners would not have to pay millions in DMC administrative costs.
"He told me, 'Dave, I've got a small tax bill ready to roll out, and if we can get that out on the floor, the DMC provision is in it,'" said Senjem, who sponsored the bill in the Senate.
But in the end, the legislative Hail Mary failed. The Senate ran out of time to pass the bill. Meanwhile, House Taxes Committee Chairman Greg Davids repeatedly made clear he wouldn't allow the DMC measure to pass. The Preston Republican's reasoning was this: He didn't want a bunch of small tax provisions passing unless they were part of a bigger tax cut bill.
"What does the Republican House get out of this? Nothing except giving up a whole bunch of leverage for next year," Davids said.
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Still, Rochester Republican and DFL lawmakers worked hard up until the final minutes of the session to get the measure passed. Tactics included crafting multiple backup plans and a personal plea to House Speaker Kurt Daudt. Failure of the bill to pass is bad news for Rochester taxpayers, according to House bill author Kim Norton, DFL-Rochester.
"It will mean that (Davids) is raising taxes on the Rochester citizens if the city can't manage to get through this next year without having to dip into property taxes. That's the reality of this," Norton said.
A closer look at the bill
In 2013, the Minnesota Legislature approved a $585 million funding package for public infrastructure to support Mayo Clinic's planned $3.5 billion expansion. The deal required a $128 million match from the city of Rochester. It wasn't until after the bill passed that Rochester officials raised concerns that the city's portion could swell far beyond the $128 million due to administrative costs.
Over the next five years, administrative costs for DMC are expected to total $21 million. Mayo Clinic recently announced it would chip in $585,000 per year towards those costs. But it leaves plenty unfunded. City officials want lawmakers to give them the OK to use an already approved, local-option, quarter-cent sales tax to pay for it. They also want the money spent on administrative costs to count toward the city's $128 million required match.
A series of setbacks
Early on in the session, the prospects for the legislation appeared promising. The language had made it into the House tax bill and key elements of it were in the Senate tax bill. Then the problems started.
Senate members of a tax conference committee agreed to put the final House DMC language in a tax bill. But Davids balked. He wanted them to also include language prohibiting any public dollars from being used for Zip Rail. But those negotiations proved moot when House and Senate leaders announced the final budget did not include a tax bill.
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When Davids found out there would be no tax bill, he made the case to House Speaker Kurt Daudt that no tax provisions — no matter how small — should be allowed to pass. That's when Rochester lawmakers started working on Plan B. They hatched a plan to try to get the language attached to an economic development and energy funding bill. To help make that happen, Norton was the only Democrat to vote for the bill. That enabled her to get a spot on the House-Senate conference committee that would negotiate the final bill.
While Norton said there were some things in the bill she liked, there were plenty of things she didn't support. But she decided to vote for it in hopes it would provide another path to get the DMC language passed.
"It seemed like we were heading for a train wreck and we needed to at least have a plan," Norton said.
Meanwhile, Senjem and Sen. Carla Nelson, R-Rochester, were hard at work in the Senate trying to get the language attached to the Senate economic development and energy bill. But in the end, those efforts failed.
In a last-ditch push to move the bill forward, Nelson approached House Speaker Kurt Daudt the night before the final day of session. She made her case that it was critical the bill passed — not only for Rochester taxpayers, but also for Republican House members. She noted the city has a daily newspaper and three television stations that would be paying plenty of attention to the issue.
"Speaker Daudt understood and was very receptive," Nelson said.
Even so, it wasn't enough. Davids said he had already talked to the speaker about the importance of not allowing any tax provisions to advance and he had Daudt's backing.
A bipartisan group of Rochester lawmakers deployed one last strategy. They tried to get the DMC language tucked into a tax policy bill filled with noncontroversial items. But Davids put a quick stop to that. Norton even asked the ranking Democrat on the House Taxes Committee, Rep. Ann Lenczewski, to plead the city's case. It didn't work.
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In the end, Davids said Democrats are to blame for the DMC's failure to pass because Senate leadership demanded that lawmakers support a gas tax hike in exchange for tax cuts.
"If the Democrats are going to kill the bill, there are consequences for that. You can't pick and choose," Davids said.
He added that no Rochester lawmakers or city officials ever talked to him about the DMC issue. That's something Nelson denies, saying she spoke to Davids on several occasions about it.
In any case, Rochester lawmakers are already eyeing the upcoming special session in hopes it will give them another chance to get the DMC bill passed.
"My dad always told me where there's a will, there's a way and believe me there was a will," Nelson said. "It didn't happen now but we're not giving up."
