Attempt made to resurrect two-state tax deal

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ST. PAUL -- A Minnesota Senate committee is looking at how to revive a long-standing practice in which Wisconsin and Minnesota residents who work in the other state only pay income taxes at home.

The Senate Taxes Committee heard testimony Thursday on a pair of bills relating to the 4-decade-old agreement that would allow about 13,000 Minnesotans and more than 33,000 Wisconsin residents who cross the state border for work to file income tax returns in just one state.

The program was terminated in September because Gov. Tim Pawlenty felt Minnesota's neighbors to the east were taking too long to make payments, which he said hurt his budget-balancing attempts.

A bill proposed by Sen. Kathy Saltzman, DFL-Woodbury, called for the Minnesota Revenue Department to work with Wisconsin counterparts to study each state's income tax returns for the 2010 tax year.

The department would report back to the governor and lawmakers with updated benchmarks for the program going forward.

Saltzman said Wisconsin and Minnesota lawmakers have been working together to find ways to re-establish the reciprocity agreement.

The other bill calls for restoring the reciprocity agreement. Sponsored by Sen. Sharon Erickson Ropes, DFL-Winona, the proposal would give the Legislature power to make reciprocity agreements. That would be consistent with Wisconsin, where the Legislature has authority to end or negotiate changes in reciprocity.

The change, Ropes said, would also take the governor out of a position "where he is singlehandedly capable of raising taxes without any kind of legislative input or representation from taxpayers."

Ropes said citizens in her district have indicated the end of reciprocity will send their taxes will up $300 to $400 a year.

The committee decided to hold onto both measures to consider folding them in a larger bill.

Tellijohn reports for the Woodbury Bulletin and other Forum Communications Co. newspapers.

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