The T Word: Differences in sensibility point to a hard road for the taxes conference committee

According to the deadlines set by legislative leaders, the House/Senate conference committee on taxes has until gavel-down on Thursday to reconcile a pair of very different omnibus tax bills. And if what has transpired there so far is any indication, it’s going to be a rough ride to the finish line.

In dollars-and-cents terms, there’s a substantial discrepancy between the $1.5 billion in new revenue raised in the House omnibus and the $2.2 billion target reached by the Senate bill. But that $700 million gap pales beside the measures’ wide variation in approach [House] [Senate] and–perhaps more to the point–the vast differences in sensibility between House chair Ann Lenczewski (DFL-Bloomington) and Senate chair Tom Bakk (DFL-Cook).

Lenczewski is a self-described tax policy wonk whose sense of mission is as deeply tied to stewardship of the tax code as to the new revenues she was charged with bringing to the table. Roughly a third of her bill’s new revenue comes from ending tax exemptions she deems outdated, unfair or unwise.

Iron Ranger Bakk is a proudly old-school politico from a perennially depressed part of the state. He’s less interested in the fine points of tax policy than in the practical politics of the matter as he sees it: trying to get a bill hammered out to meet revenue goals, the more simply the better; and making sure that it contains some spending on job-creation measures. (It was Bakk, remember, who originally carried Gov. Tim Pawlenty’s JOBZ program in the Senate on an across-party-lines basis.)

Their differences, amicable as they may be, are written all over the conference committee proceedings. At the conference committee’s initial meeting last week, the pair continued their tradition of kicking off the committee’s deliberations with gag gifts. This time around, Lenczewski presented Bakk with a bottle of antacid pills in response to his comment that he got heartburn from the House’s proposal to end the state mortgage interest deduction and replace it with a capped tax credit [previous item]. Last year, Bakk gave Lenczewski a jumbo package of Ivory Soap (you know: 99 and 44/100ths percent pure) to commemorate her rep as a tax policy purist.

Those tensions didn’t take long to emerge in committee. On Friday, a theoretically pro forma read-through of the fiscal spreadsheet covering both bills was detoured for the better part of an hour when Lenczewski challenged provisions on the Senate side of the ledger that would extend loans to businesses for building facilities in Minnesota. (Those 11th-hour loan proposals–which include $10 million for a wind-turbine blade manufacturer and $3 million for a Swiss company that customizes and details private jets–aren’t part of the Senate omnibus, but Bakk wants to incorporate them into the final package.)

It was a fascinating little contretemps, to be sure–a veritable primer on longstanding divisions at the Capitol over loans, subsidies, and tax breaks granted in the name of spurring business and job development. I’ll try to post some excerpts of the back-and-forth in a separate item.

But meanwhile, the taxes conferees have met three times without really broaching the main disagreements in their omnibus bills, and if they’re to meet deadline, they have only three more days after today to forge an agreement.

The committee will convene again this afternoon or evening after both chambers’ floor sessions are concluded.