Budget, tax bills gain Pawlenty signature

In the next three years, the state will offer $100 million in tax credits and refunds.

ST. PAUL, Minn. (AP) âÄî Gov. Tim Pawlenty enacted two sets of cuts Thursday in starkly different fashion: He held a celebratory bill signing for a raft of business and investor tax breaks while he privately consented to more than $300 million in state spending cuts. The Republican governor acted on the high-profile bills approved earlier in the week by Minnesota’s Democratic-led Legislature. Lawmakers, businessmen and labor union representatives surrounded Pawlenty as he put his name to the tax plan, which supporters touted as a way to encourage employers to expand payrolls and upgrade buildings. Over the next three years, the state will offer $100 million in tax credits and refunds. Some will go to investors in start-up companies or those who rehabilitate historic buildings. Others likely to get breaks are developers planning a major expansion at the Mall of America and Ford Motor Co. if the carmaker reverses a decision to close a St. Paul truck plant. To pay for the breaks, a $30 million annual gas tax credit for the poor was eliminated. The gas tax credit was due to kick in this year. “Clearly, redeploying that fuels tax credit to these purposes was a higher and better use of that money,” Pawlenty said. “This relates to investments in the economy in ways that will be long term and sustainable.” Backers predicted a quick payoff. Kurt Hagen, executive vice president of the megamall’s owner Triple Five Corp., said he was planning to head right into meetings over an ambitious but stalled proposal to add millions of square feet to the shoppers’ palace. Labor unions have pushed the project as a way to get paychecks to laid-off construction workers. The city of Bloomington will be able to impose a special sales tax on mall purchases and redirect other taxes to the project. “It makes it easier,” Hagen said. “You don’t know what you can build until you know what tools you have. This adds to the toolbox.” Likewise, St. Paul legislators and city leaders said they hope Ford will put the breaks on a plan to abandon a plant on the Mississippi River in 2011. The law exempts Ford from some income, property and sales taxes and give the company a credit for jobs it adds. In exchange, Ford must agree to stay and upgrade the sprawling facility. “Hopefully, this will make a difference and keep Ford operating in our community,” said St. Paul councilman Pat Harris. Pawlenty acknowledged that Ford hasn’t committed to any deal and probably won’t until an auto industry shakeout passes. Separately Thursday, Pawlenty made good on a promise to sign a plan cutting Minnesota’s projected $1 billion budget deficit by one third. The bill slices $312 million in spending across an array of categories, including aid to local governments, public colleges, farm programs and prison operation. The biggest chunk comes from aid to cities and counties, which would fall by about $100 million. Lawmakers are counting on $400 million in federal Medicaid money to fill a portion of the remaining gap. They plan to outline the remaining fix after Easter.