Senate tax bill cuts city aid, allows for local sales tax

Senate Republicans rolled out a tax bill today (Wednesday) that slashes state aid to cities and counties..

The cuts are similar to a bill DFL Gov. Mark Dayton vetoed last month. Overall, the new Senate measure cuts aids and credits spending by 22 percent, as part of a broader effort to erase a $5 billion state budget deficit. Republican Senator Julianne Ortman of Chanhassen, the chair of the Senate Taxes Committee, said taxpayers have been subsidizing cities through Local Government Aid.

“These programs have grown substantially since LGA was first introduced in 1971, and it was our job to look at it and make sure that we were spending each dollar effectively and efficiently as possible on behalf of those that pay these taxes that support these programs,” Ortman said.

The Senate bill would make it easier for cities to impose a half cent sales tax, if local voters approve. The measure includes a gradual phase out of state-imposed business property taxes, but there is no coprorate income tax reduction.

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