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Tax-relief legislation would benefit medical lab

ST. PAUL — A bill that would save Mayo Medical Laboratories $4 million per year in taxes passed a key Minnesota House Committee on Thursday.

Rep. Duane Quam, R-Byron, is sponsoring a bill that would exempt health care providers from paying the state's 2 percent provider tax if at least 60 percent or more of their gross revenue comes from outside the state. Money raised by the provider tax is used to fund a state health care program called MinnesotaCare, which covers low- and middle-income Minnesotans.

Quam said the bill would make sure that Mayo Medical Laboratories is able to remain competitive and keep jobs in the state.

"There is some urgency because when tight economic times are here, that competitiveness gets to a point where there are winners and losers, and I don't want to take the chance in that delaying (the bill) to get perfection that we could lose a key component of the economy (in Rochester)," he said.

As originally written, the bill would have enabled any health care provider with 20 percent or more of revenue coming from out of state to qualify. But it turns out that would have exempted the entire Mayo Clinic and Mayo Health System along with other hospitals in the state. Quam said he realized this isn't the time for a bill that would cost the state tens of millions of dollars.

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Kathy Meyerle, an attorney for Mayo Clinic, testified in support of the bill. Mayo Medical Laboratories employs 700 people — 500 of them based in Rochester — and tests 12 million specimens every year from around the world. She said the lab's competitors in other states do not have to pay this kind of a tax.

"This additional 2 percent tax creates a real impediment for our competitiveness," she said.

The bill did face opposition from a couple of Democrats on the House Health and Human Services Finance Committee who raised concerns about the loss of $4 million. Rep. Erin Murphy, DFL-St. Paul, said she thinks the state needs to wait and look at repealing the entire provider tax in a couple of years when the federal health care law takes effect.

The committee approved Quam's bill on a voice vote, and it heads to the House Taxes Committee. Rep. Tina Liebling, DFL-Rochester, a member of the committee and co-sponsor of the bill, voted in favor of the measure.

Genomics partnership

Rep. Mike Benson, R-Rochester, introduced a bill on Thursday that would provide $8 million of funding per year for the Minnesota Partnership for Biotechnology and Genomics. The University of Minnesota/Mayo Clinic partnership was supposed to receive $8 million in funding per year. But that number has shrunk in recent years as lawmakers have wrestled with budget problems.

Last year, funding for the genomics partnership was cut by $1.2 million over a two-year period. With the state facing a projected $5 billion budget deficit, DFL Gov. Mark Dayton has proposed an $838,000 cut over two years in addition to carrying on the cuts from last year. A Republican phase one budget proposal had called for continuing the $1.2 million cuts.

Benson has said he believes it is critical to fully fund the partnership because it helps create jobs in the state.

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Dayton's tax proposal

Republicans put Democrats on the spot Thursday and forced them to vote on Dayton's $3.2 billion tax proposal. In the House and Senate, Republicans brought forward the proposal and blasted the measure.

"This is a critical time in our economy, and I am fearful that this is going to spiral down further into a recession just at a time when we are going to pick up a little steam here," said Sen. John Howe, R-Red Wing.

Dayton sent a letter to Democrats in both the House and Senate urging them to vote against his tax proposal saying what the Republicans brought forward "as a way to reject this charade."

Dayton said his tax and budget bills have not yet been finalized and are still being analyzed by the state budget officials.

"This is juvenile. It's a distraction from the real responsibility of making hard budget decisions and governing, and they should stop and get to work," Dayton told members of the media.

No one — Republican or Democrat — voted in favor of the tax proposal in the House. In the Senate, only Sen. David Tomassoni, DFL-Chisholm, voted for the measure.

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