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Statement of Opposition Constitutional Amendment to Increase and Dedicate the Sales Tax To Natural and Cultural Resources

The Minnesota Chamber of Commerce opposes the constitutional amendment to increase the state's sales tax rate by 3/8 of one cent and dedicate the revenue to natural and cultural resources because it is not necessary to adequately fund the Clean Water Legacy Act, is poor budget policy, and is a significant business tax increase. The Chamber's opposition is based on the following:

The business community supported the Clean Water Legacy Act to clean up the impaired waters of the state. However, it does not believe a constitutional amendment to increase and dedicate the sales tax is necessary to fund water clean up. Rather, in 2004, the business community and 15 other stakeholders supported a water fee to finance the clean up effort, i.e. the Clean Water Legacy Act. The fee is a viable alternative to the funding provided by the constitutional amendment. In addition, Clean Water Legacy funding could come from the existing Pollution Control Agency budget or the Environmental Trust Fund.
The constitutional amendment states "[t]he dedicated money under this section must supplement traditional sources of funding for these purposes and may not be used as a substitute." Therefore, the proposed amendment will not only dedicates the 3/8 cent increase in the sales tax, but may also limit the flexibility of the Governor and Legislature to address future budget deficits and the budget priorities of the state by also requiring the dedication of the current base budgets for wetlands, prairies, forests, fish, game, wildlife, water quality, groundwater, drinking water, parks, trails, arts, arts education, art access, and Minnesota's history and cultural heritage.
According to the Department of Revenue, businesses pay approximately 45% of the state's sales tax. If passed, the constitutional amendment will increase business taxes by about $110 million in FY 2010. That business tax increase will grow in future years as sales tax revenue increases.

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