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Tax reciprocity dead until 2011; special session convenes Wednesday

Tax reciprocity dead until 2011; special session convenes Wednesday

Efforts by two area legislators to restore Wisconsin's income tax reciprocity for state residents who work in Minnesota appears to be dead until new Governors are elected in both states.

Sen. Sheila Harsdorf (R-River Falls) and Rep. Ann Hraychuck (D-Balsam Lake) met Wednesday, Dec. 9th with Minnesota Commissioner of Revenue Ward Einess, armed with a proposal that would have offered Minnesota accelerated payments and interest in exchange for continuing the tax reciprocity agreement that has been in place since 1967.

The proposal was actually "better than the deal Minnesota last offered to Gov. Doyle", according to Harsdorf spokesman Jack Jablonski. The offer was made with "unprecidented" support from Wisconsin Legislative leadership to immediately take up the issue in a special session of the Legislature scheduled to begin on Wednesday, Dec. 16th.

But Einess essentially said no, Jablonski said, citing Minnesota's looming additional $1.2 billion budget deficit.

The reciprocity agreement has allowed residents who live and work in different states to file a single tax return in their home state. Because there are more than twice as many Wisconsin residents who work in Minnesota, Wisconsin then reimburses Minnesota for the tax it collects but the process usually takes more than a year. Minnesota wanted its money more quickly.

"The long-standing agreement should not have been scuttled for short-term proprietary gain as it was," said Harsdorf in a press release. "While I'm greatly disappointed in both Governors for failing to reach agreement months ago, I am heartened for the future of reciprocity because our state's legislative leaders took unprecedented action to try and make this work."

Harsdorf and Hraychuck expressed hope that once both states have new governors in 2011 the can "get back to the table and restore a common-sense agreement that benefits taxpayers of our region," the release stated.

Wednesday's special session is being called under the pretense of passing tougher penalties for repeat drunk drivers but Doyle has also asked that lawmakers deal with an issue of governance with Milwaukee Public Schools.

Both the Senate and the Assembly have already passed drunk driving legislation on unanimous votes. But they have to agree to the same bill before they can send it to the Governor's desk, something that's eluded them so far.

They've agreed on a provision that would require an ignition interlock device for repeat drunk driving offenders, and another that would make a fourth drunk driving offense within five years of a previous offense a felony. They've disagreed on how to pay for the changes. Senators called for a major increase in the criminal assessment fee to cover part of the bill while Assembly lawmakers were less specific.

Gov. Jim Doyle has proposed allowing Milwaukee's mayor to appoint the superintendent for Milwaukee Public Schools. Several Democratic lawmakers adamantly oppose that and have proposed an alternative that would keep more power with the school board. Doyle says the two sides are still talking, but he feels strongly about the issue. Doyle says while he's glad opponents are no longer defending the status quo, their alternative does not make it clear who would be in charge of Milwaukee schools.