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Tom Scheck, MPR News 90.3 MPR, Published April 22 2013

Minn. lawmakers consider millions in new fees

ST. PAUL – New fees and fee increases are scattered throughout the budget bills moving through the Legislature.

The Minnesota House and Senate have been working on their budget bills, with Democrats and Gov. Mark Dayton planning to increae taxes by about $2.5 billion. The fees and surcharges would raise hundreds of millions more.

The list includes $3 more for a driver’s license, a $5 surcharge on homeowner’s and auto insurance policies, a new fee on prepaid cellphones and a $15 surcharge on traffic violations.

The House environment budget bill raises fees on water.

Lakeville City Administrator Steve Mielke said his city’s water fees would increase from $45,000 a year to $125,000 a year.

“The only way we pay for that is to pass the cost on to our water customers,” Mielke said. “We’ve estimated that we would have to raise rates somewhere in the area of 2 to 3 percent depending on where this ends up.”

In some instances, the money raised by the fees is spent for specific purposes, such as overseeing barbers and accountants. But in other cases, the money is used to pay for programs that typically rely on general tax dollars.

Overall, the House and Senate budget bills propose using $300 million in fees, surcharges and one time money.

“It’s breathtaking in its scope and amount,” said state Rep. Mary Liz Holberg, R-Lakeville.

Holberg is frustrated that Democrats plan to increase fees and surcharges when they also are proposing tax hikes well above what’s needed to erase the state’s $627 million shortfall.

“We think they’re north of $2.5 billion in tax increases,” Holberg said. “My guess is they’ll approach or surpass $3 billion in total spending by the time they’re done.”

This isn’t the first time policymakers have increased fees to pay for key programs. Former Republican Gov. Tim Pawlenty relied on fee hikes during his first term to honor his pledge not to raise taxes.

Democrats are defending the proposed fees in their budget. Higher fees are necessary in some cases, said state Rep. Lyndon Carlson, chair of the House Ways and Means Committee, which handles the purse strings of the state budget.

For example, the courts have been underfunded for 10 years, said Carlson, DFL-Crystal. He said increasing fees on attorneys is one way to ensure there are no cuts to the public defender budget.

Carlson also stressed that some fees are being eliminated or reduced in the DFL budget.

The chairs of the Health and Human Services committees in the House and Senate say imposing surcharges on hospitals and HMOs will prevent cutting health care for the needy.

As for the water fees, state Rep. Jean Wagenius, DFL-Minneapolis, defends them, saying the money will be used to monitor and protect groundwater in the state.

But some worry that greater reliance on fees will simply mislead the public about how much it costs to run state government.

State Rep. Michael Paymar, DFL-St. Paul, who isn’t shy about his support for tax increases, said he is concerned about the level of fees in all of the budget bills. Paymar, who chairs the House Public Safety Committee, worries higher fees could make the state’s court system too costly.

Dayton, who proposed about $45 million in new fees in his budget, said he is watching the Legislature closely.