~ Governor delivers on commitment to provide tax relief, balance budget, reduce spending ~

Saint Paul – Governor Tim Pawlenty and legislative leaders have agreed on a plan to balance the state budget without raising taxes while providing significant tax relief for Minnesotans. The agreement erases a projected $935 million deficit and includes the Governor’s plan for a property tax cap and tax relief for veterans and military members.

During several days of negotiations leading up to the agreement, Governor Pawlenty fought for a property tax cap to protect homeowners from rapidly increasing property taxes. The agreement includes a cap that will limit cities and counties to an increase of 3.9 percent per year. Governor Pawlenty’s property tax cap and related relief is projected to save taxpayers $78.5 million in 2009 and $460.5 million over the next three years. Also, cities and counties will receive additional aid.

“Minnesotans deserve tax relief and a state government that lives within its means,” Governor Pawlenty said. “This agreement delivers both. I want to thank legislative leaders from both parties for their hard work and willingness to seek out solutions. The result is a balanced budget, a strong property tax cap, additional tax relief, reduced government spending, no additional taxes, health care reform, a new state park and new facilities at the Minneapolis Veterans Home.”

Highlights of the overall package include:

• Property tax cap of 3.9 percent, plus household growth, for three years
• $25 million in property tax relief through the property tax refund program which provides direct relief to homeowners and $60 million in local government aids and credits
• Tax relief for veterans and members of the military, including a new tax credit of up to $750 per person annually for those who served more than 20 years or were disabled in service, a doubling of the existing overseas deployment tax credit to $120 per month
• An overall reduction in state government spending and a balanced budget for FY 2008-09
• Progress toward resolving the projected budget deficit for FY 2010-11
• Total bonding within the state’s 3 percent debt service limit, including funding for Central Corridor, a nursing facility at the Minneapolis Veterans Home and Lake Vermilion State Park
• Nation-leading health care reform that includes increased transparency, pay for performance, required e-prescribing by 2011 and tax credits
• Increased funding for K-12 schools and nursing homes