DFL Party's plan for new jobs: tax breaks

When I first read the title, I thought hell had froze over. That was until I read the fine print.

First in a three part series in the House effort to put jobless to work by Bill Salsbury at the Pioneer Press leading up to the 2010 session.

Minnesota House Democrats on Friday unveiled a package of 10 tax breaks they intend to pass quickly in the 2010 legislative session to spark job creation.

The legislation would provide tax credits for investments in high-tech, manufacturing and green businesses, give cities and counties more flexibility in using local tax incentives for economic development and egg on the Mall of America's Phase II expansion.

The chief architect of the package, House Tax Committee Chairwoman Ann Lenczewski, DFL-Bloomington, said it was designed to put building contractors and construction workers back to work.

"It's what we can do at a very scarce time in the economy," she said.

The plan would offer incentives for private-sector investment by providing $10 million for "angel investment credits" and "historic rehabilitation credits." The money would come from closing what Lenczewski called a real estate investment tax loophole.

The legislation also would relax state restrictions on "tax-increment financing," which allows local governments to use the additional tax revenue from a business development to help pay for the project.

The Mall of America and Bloomington would get more flexibility to use local taxes generated at the giant shopping center to help finance a nearly $2 billion expansion on 42 acres of vacant land just north of the mall.

The mall would not get any state funds or local property tax dollars, Lenczewski said. "To pay those taxes, you would have to shop there," she said.

House Speaker Margaret Anderson Kelliher, DFLMinneapolis, said the tax breaks are one of three parts of a Democratic strategy to "put thousands of Minnesotans back to work again." The other two elements are a $1 billion public works bonding bill that will be introduced next week and an economic development initiative that is still being fleshed out. Kelliher said a bipartisan House jobs task force that she appointed in August generated the ideas.

The leading House Republican, Minority Leader Kurt Zellers, of Maple Grove, said the DFL package was a "good starting point" but a relatively small one that is "not quite enough to get us over the hump."

Lenczewski said the proposals were developed in consultation with Republican Gov. Tim Pawlenty's tax commissioner and DFL senators. She predicted quick agreement on them.

"We are working in the world of the doable. This is not fantasy legislation," she said.

The angel credit is for individuals who invest in start-up companies. It would provide a 25 percent tax credit for investments in businesses with fewer than 100 employees and less than $2 million in gross receipts.

"It will make Minnesota competitive with our neighboring states and states across the country, it will help to build and reinforce the culture of entrepreneurship and it will leverage investments that Minnesotans make each and every year in the University of Minnesota," said Rep. Jim Davnie, DFL-Minneapolis, chief sponsor of the angel investor bill.

The university generates innovative ideas, but the state has fallen short in moving those ideas into businesses and jobs, Davnie said. The tax credit would help transfer those ideas into new enterprises.

The governor likes that tax break, as long as it comes in a clean bill.

"Gov. Pawlenty has long championed an angel investment tax credit and hopes the DFL will break from their pattern of including it in a bill that gets vetoed, because it also has a truckload of other job-killing tax increases," Pawlenty spokesman Brian McClung said in an e-mail.

The historic rehabilitation incentive would piggyback on an existing 20 percent federal tax credit for restoring historic buildings. The state would provide another 20 percent credit for a combined 40 percent tax break.

Mall of America spokesman Dan Jasper said in a statement that mall officials have not seen Lenczewski's proposal for their project but are eager to learn the details. He said they are exploring the possibility of moving the second phase from a single-phase construction project to multiple phases in order to complete it in a "still difficult economic environment."

"We are encouraged by the announcement today and hopeful that it can help us get started on the first phases of expansion," Jasper said.

The tax-increment changes would allow cities and counties to help finance projects that can't get bank financing. Local governments also could use that tax tool to revitalize housing in blighted areas and encourage "transit-friendly dense development" in areas such as the proposed Central Corridor light-rail line between St. Paul and Minneapolis.

Another piece of legislation would allow cities and counties to issue industrial revenue bonds to finance green buildings. A separate bill would let business owners ask a city to levy special assessments on their property to pay for making them more energy efficient.

These are nothing but token efforts on the part of the democrats. The construction jobs that will be created by the DFL's efforts target only those workers that are union. Any big commercial construction job is totally union controlled. Only 15.1% of Minnesota's workforce is union and those are the people who would get jobs under this phony, minuscule attempt at government controlled job creation. What about the other 84.9% of the Minnesota workforce? Nearly 85% of us will get nothing from this, but the unions who helped get the liberals elected are sure going to get taken care of.

The "angel tax" does not even come close to putting our state on equal footing with neighboring states. Wisconsin gives a 25% tax write off for the first four years in business.

And a billion dollar 'public works' bonding bill on top of all of this. Again targeted toward the unions and not the workforce as a whole. Why don't they call it the Minnesota stimulus bill for shovel ready jobs? This is nothing but a cheap copy of Obama's failed stimulus bill. We have seen how successful that was.

I would also like to point out that this 'bipartisan jobs task force' was hardly bipartisan as it was made up of 24 democrats and only 8 Republicans. And as for input from business, there was little if any.

If this passes, watch them all pat each other on the back and tell the voters how wonderful they are. Of course they are attempting this in an election year. Bet they are all shaking in their boots worried about their jobs this November.