New Mayo plan drops tax angle

Published 9:00 am Friday, April 12, 2013

ST. PAUL (AP) — A complicated tax capture plan sought by the Mayo Clinic to assist in a 20-year expansion is being dropped in favor of state aid payments directly tied to the amount of private spending on the development.

The revisions to the Mayo proposal were coming today in the Senate Taxes Committee. The Associated Press obtained a copy of the planned changes, which were developed in recent days as Mayo has tried to soothe concerns of leading lawmakers. Mayo was involved in shaping the new concept along with Gov. Mark Dayton’s chief of staff.

Mayo Clinic came to the Capitol this year pitching up to $5 billion in private investment if public entities committed to helping with infrastructure. Officials said a major expansion of the world-renowned clinic is needed to keep pace with other leading medical centers.

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Under Mayo’s original plan, a slice of future tax payments would have been carved off to repay debt, a novel concept that made some lawmakers nervous about setting a precedent that other cities and companies would later pursue.

The new plan calls for private investors to commit at least $150 million and local governments to pledge $60 million before any state contributions are made. That would free up annual state payments, with the amount based on the private investment. The state share for public infrastructure is capped at $525 million.

Each summer, an aid payment of 3.5 percent of the private investment that year would be paid out. The initial $5 million state payment will be compounded each year until the state maximum allotment is reached.

The pot of state money would be used to help pay off debt from bonds sold to build roads, sewers and other public assets needed to accommodate the growth on the Mayo Clinic campus and related entertainment and shopping space envisioned in the Destination Medical Center proposal.

Mayo spokesman Karl Oestreich said the clinic is pleased with how things are progressing as the Legislature narrows in on a workable proposal.

“We’re confident a solution is going to be passed this session,” he said. “We continue to move in the right direction.”

The new plan, which will become the backbone of a Senate bill, is far from home free.

House Tax Committee Chairwoman Ann Lenczewski, DFL-Bloomington, said while the proposal surfacing in the Senate tracks with the concept she intends to release next week, there will be differences. She said the House version will spell out which taxes could be used to make up an expanded local share.

Lenczewski said the new approach is more straightforward than the one Mayo floated initially.

“If there’s something worth having, it’s worth paying for,” she said.

Democratic Rep. Kim Norton, the House sponsor, said the altered concept fits her goal: To make sure the private investment is there before the public piece comes.

Republicans have complained that the fate of the Mayo plan will be tied to a tax bill that seeks to raise income and other taxes to balance the state budget. The House and Senate tax committee heads say they won’t move the Mayo bill as a standalone proposition.

Senate Minority Leader David Hann, R-Eden Prairie, announced his support for the Mayo expansion Thursday but said he would only give his vote if it moved independently.

“Let’s do this with eyes wide open, with straightforward votes, up or down. Let’s not let it get confused with all of the other politics involved in the tax bill,” Hann said at a news conference where he was flanked by two GOP senators from Rochester. One of them, Sen. Carla Nelson, accused Democrats of holding the Mayo plan “hostage” to other tax measures.

That drew a sharp response from Senate Taxes Committee Chairman Rod Skoe, DFL-Clearbrook.

“Everywhere you look it has tax provisions,” Skoe said of the Mayo request. “If I had a project like this in my area, I’d be voting for the bill.”