Among local officials with a stake in the tax bill Gov. Tim Pawlenty vetoed Wednesday were Park Rapids mayor Nancy Carroll and state Sen. Rod Skoe.
Carroll said Thursday she is disappointed the governor vetoed the tax bill including Local Government Aid (LGA) funding.
"The city's budget is challenged by increasing needs due to growth in our area and having so many residents on fixed incomes," Carroll said.
"We rely on LGA to help us provide needed services and keep property taxes low. LGA was developed to provide equity in services and property tax fairness throughout the state," she added. "It is disappointing that the governor vetoed the omnibus tax bill which includes LGA funding."
According to information provided by the Coalition of Greater Minnesota Cities (CGMC), Park Rapids will receive about $72,000 less in LGA in 2008 than it would have received if the tax bill had passed and about $33,000 less than in 2007.
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In criticizing the veto, CGMC affirmed Skoe's position regarding factoring inflation into the state's spending forecast.
The DFL senator from Clearbrook was a member of the 2007 Tax Conference Committee that negotiated the tax bill. Before the veto was final, Skoe expressed concern about Pawlenty's response to the measure because he was unhappy with a requirement that the state add expected inflation increases to the revenue side as well as the expenditure side of budget forecasts.
"Adding inflation into the state's budget forecast - biannual predictions of how much money the state has in its coffers and how much is available to invest or spend - was standard practice in Minnesota until 2002," Skoe said. "Today, it's a common practice in 48 other states as well as within the business sector."
The 2007 Tax Bill would have set the state back on course to follow generally accepted accounting practices, said Skoe.
"When I, as a farmer, sit down to plan my yearly finances, I consider my annual average yields, acres planted, the current price of soybeans and other crops I raise, and how much the price has typically increased or decreased in previous years. I use many tools, including the futures market, to help me assess the price for the coming months," Skoe said.
"This is the revenue side of my forecast. But I also have to consider the increase in costs, such as increases in labor, seed, fertilizer and fuel. From this revenue and expense information - my farm's forecast - I then plan my budget.
"I factor all this information and use it to decide if I can afford to continue the same level of spending, or if I need to make changes in the number of acres I plant or change crops that I plant. I don't automatically assume I will spend that money or spend it in the same way. If I only accounted for inflation costs on the revenue side and not the expenditure side of my forecast, I would incorrectly assume that I have more money to spend than I actually have.
"Unfortunately, this is what the state has been doing since 2002 by not considering inflation in its expenditure forecasts," Skoe explained.
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"The governor is claiming that accounting for inflation would put the state on 'auto-pilot.' This is not true," Skoe said.
"The forecast is just that: a forecast, or a prediction of how much money the state will have to work with. It does not lock the legislature into spending a set amount of money, just as my farm is not locked into doing the same thing every year. It simply gives me a responsible understanding of how much money it will cost to continue farming the same acres with the same crops this year as I did last year.
Skoe said the 2007 Tax Bill included many important statewide tax provisions in addition to permanent property tax relief for homeowners and aid to local governments to restore the state-local partnership.
The bill would have increased tax credits for members of the military, improved tax compliance, and created a new vacant rural lands category and an improved Green Acres program.
