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Lawmakers trade threats over Rochester sales tax, Destination Medical Center

ST. PAUL — Preston Republican Rep. Greg Davids is vowing to withdraw his support for Mayo Clinic's Destination Medical Center project if House Democrats try to rescind $5 million in funding for small communities around Rochester.

Davids came up with the idea to require a portion of the city's half-city sales tax extension go to 17 surrounding cities for economic development in a proposal he dubbed the "Greg Davids Good Neighbor Policy." Rochester voters approved the $139.5 million extension of local-option sales tax package in November. The former House Taxes Committee chairman is angry that Rochester DFL Rep. Tina Liebling has said she'll fight to take the money back and use it toward Mayo Clinic's DMC initiative.

Calling Liebling "arrogant, Davids added, "Who does (Liebling) think she is that she can go in and reverse the decision of her voters? That is what this is about and that's wrong."

Liebling said despite opposition from city officials, she will support efforts to reclaim the $5 million. She said no other city in the state has been required before to send some of its tax dollars to other communities and it sets a bad precedent. She called the $5 million pool of money "pork" and said it's bad tax policy.

"It was done in the first place as a stick in Rochester's eye," she said, "and we need the money for DMC and that benefits all the communities and the region."


Changing legislation

Liebling said she expects the language redirecting the money will be part of the House tax bill and that even if she doesn't try to put it in, other committee members will do it.

That's prompted Davids to threaten to offer 19 amendments to strip out every piece of the Rochester city sales tax plan. Davids acknowledges those efforts likely won't be successful, but it sends a clear message. He also said that while he has wholeheartedly supported Mayo Clinic's request for $585 million in state support for public infrastructure to back its $6 billion expansion plans, he cannot continue to back it if some of the money from small cities is redirected to that.

"If Rep. Liebling is going to play her little game, I will not take part in it," he said.

In response to Davids' threats, Liebling said, "I hope that stress of the session has not been too much for Rep. Davids. I disagree with him on a tax policy issue, but I wish him all the best."

Rochester concerns

Rochester Mayor Ardell Brede said he and other city leaders asked her to drop her efforts to rescind the funding for small cities. Rochester Area Chamber of Commerce President John Wade is also calling on Liebling and Davids to leave the sales tax language alone.

"It will not serve this community's best interests to alter the local option sales tax — period," Wade said.


Liebling said she has heard from many of her constituents who said they did not realize that some of the Rochester city sales tax money would be given out to other cities.

"There are few times when I go against the city council, but this is one of them because I don't think the people I represent knew that this was happening," she said.

The Rochester City Council plans to send out half the money on July 31 to area cities and the rest next year. The city of Stewartville would get $633,000 total, which would be used for cash rebates to property owners who choose to build a home or commercial building worth at least $100,000 on a current vacant lot.

Stewartville Economic Development Authority President Chris Stafford said he is "saddened" at efforts to take that money away. He said helping area cities boost their economies can only end up helping Rochester.

"I can't see how we lose. We're all in a regional area. They are the hub and we're the spokes of the wheel and let's face it, we're all connected to that hub," he said.

Assistant House Majority Leader Kim Norton, DFL-Rochester, who is sponsoring Mayo Clinic's DMC bill, said she has no control over what the House Taxes Committee ends up doing with the $5 million for small cities and that she is focused on pushing ahead on the Destination Medical Center policy. She agrees with Liebling that the tax giveaway to small cities was "horrible policy," but said she also understands it puts the city in a difficult position. It's also important to realize that Davids bears some of the responsibility for this move because he has drawn the ire of some Democrats with recent statements blasting the governor and DFL leaders for not doing enough to support Mayo Clinic's DMC plan.

Add funding for four more cities?

As some are looking to rescind the funding for small cities, other lawmakers want to add more to the mix. Rep. Steve Drazkowski, R-Mazeppa, is sponsoring a bill backed by Davids that would allow four more cities to qualify. They are Altura, Grand Meadow, Mazeppa and Wanamingo. He argues that they were mistakenly left out because they are within a 25-mile radius of Rochester and have an Economic Development Authority or Housing Redevelopment Authority — the key requirements for the funding.


But the proposal faces opposition from the Rochester Area Chamber of Commerce. It's also likely to create some angst among the 17 cities getting funding because it will mean they will see their share of the sales-tax pie shrink. Jerry Williams, the chairman of Rochester's Local Sales Tax Renewal Committee, sent an email to area lawmakers imploring them not to make any changes retroactively to the city sales tax plan.

"The determination of the 17 communities may have been political, but it is what it is. It's time to move forward with that list," he wrote.

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