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11/2/2009 This Wisconsin-Minnesota border war may be worth more than No. 4 By Steve Walters The column below reflects the views of the author, and these opinions are neither endorsed nor supported by WisOpinion.com. 
Walters Among the estimated 57,000 frustrated border-crossing Wisconsin residents are Cindy Kleven, who lives in River Falls and works at 3M in the Twin Cities, and Minnard Hojem, of Baldwin, who retired after a career as a public transit driver in the Twin Cities. Taxpayers like them are caught by the failure of governors and officials in both states to agree on how to extend a tax-filing reciprocity program that started in 1968 -- one year before Packer-turned-Viking No. 4 was born. An estimated 23,000 Minnesota residents who work in Wisconsin also face new tax-filing hassles because, after leaders of both states couldn't work agree on an accelerated payment from Wisconsin to Minnesota in mid-2011, Minnesota officials canceled the program. Ironic, considering Wisconsin Gov. Jim Doyle and Minnesota Gov. Tim Pawlenty pledged to find ways to cooperate in January press conferences. Further irony: according to the public schedule for a national Council of State Governments convention in California, Govs. Doyle and Pawlenty -- or their surrogates -- are scheduled to join the governor of West Virginia for a 2 p.m. panel discussion on Nov. 14. The subject: "Blurring Borders: Transforming Together." But Pawlenty is on his way out of office and toying with running for president, and Doyle has decided to pass on running for a third term. Plus, both states face long-term budget deficits -- deficits that forced Minnesota to ask for the mid-2011 payment but make it hard for Wisconsin to come up with that cash. For her, Kleven said ending reciprocity is "an unnecessary creation of more work and expense for Minnesota and Wisconsin residents who work across the borders. It's been running smoothly for over 40 years." Adds Kleven: "I have talked with other coworkers who are Wisconsin residents, and they are disappointed and dismayed. This is a hit on the individual taxpayer who has already been impacted by frozen salaries, reduced work hours, mandatory furloughs, rescinded 401(k) matches, etc." Said Hojem, who is 75: "I am extremely disappointed and believe they could still work something out to continue the reciprocity agreement." A Legislative Fiscal Bureau memo to Wisconsin lawmakers summarized how the program has helped taxpayers in both states: ``The primary benefit of the agreement is that border-crossing taxpayers are required to file a return and pay taxes only in their state of residence. Without reciprocity, such taxpayers would need to file a return in both states." As the number of Wisconsin residents commuting to Minnesota jobs soared, Wisconsin sent growing annual payments to Minnesota for income taxes owed that state. Wisconsin is scheduled to send a $69 million check to Minnesota in December, for example. But, in a memo last week to 21 state legislators in both states (12 in Wisconsin and nine in Minnesota), Minnesota Revenue Commissioner Ward Einess said: "Under the current reciprocity agreement Minnesota waits, on average, 17 months after taxes are paid to be reimbursed. ... As the state continues to grapple with historical budget deficits, Minnesota can no longer afford long delays or the current inequities in reimbursements." So, Minnesota asked Wisconsin to make a mid-2011 payment to help that state close a projected $2.7 billion budget deficit, Einess said, reasoning it "would have resulted in a much-needed revenue increase to Minnesota of approximately $105 million.'' Instead, Wisconsin officials offered a "modest" payment of $40 million in mid-2011, Einess said. Minnesota responded with a split-the-difference demand for $72.5 million, Einess said. But, "Regrettably, Wisconsin rejected this proposal and never submitted a counter-proposal." Pawlenty then terminated the reciprocity pact, ending it as of Dec. 31. Because an agreement couldn't be reached, Wisconsin officials estimate Wisconsin stands to lose $111.3 million in the two-year current budget cycle. This is $38.8 million more than Minnesota's $72.5 million "split the difference" offer. This revenue loss is due to income taxes from Wisconsin residents that will now be paid to Minnesota. In future years, Wisconsin will continue to experience a loss in income tax revenues but will no longer be required to make an offsetting payment to Minnesota. This week, Wisconsin Revenue Secretary Roger Ervin said negotiations to resolve the dispute had ended. Wisconsin Sen. Sheila Harsdorf, a Republican who represents the border region from River Falls, said Ervin also told her that. But she's still hopeful. "There's no reason they can't make this happen," she said. And, if you're wondering: Kleven and Hojem were still cheering for the Packers on Sunday. --Walters, a senior producer at WisconsinEye, is the former Capitol bureau chief of the Milwaukee Journal Sentinel. |
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