Tax reciprocity is dead for now

• Gov. Jim Doyle and State Sen. Sheila Harsdorf

Gov. Jim Doyle and State Sen. Sheila Harsdorf discuss the recently ended tax reciprocity agreement between Wisconsin and Minnesota during the governor’s visit to Hudson on Thursday, Oct. 22. Photo by Randy Hanson

Talk about it

Gov. Jim Doyle held out little hope of restoring the tax reciprocity agreement between Wisconsin and Minnesota anytime soon when he visited Hudson last week.

“There really is nothing that Wisconsin can do. We want to maintain reciprocity. I think it is a good thing for our citizens. Minnesota has made the unilateral decision that they are going to eliminate it,” Doyle said when asked where efforts to restore the agreement are.

Minnesota Gov. Tim Pawlenty canceled the agreement in September after Wisconsin failed to provide an accelerated payment of $72.5 million to Minnesota.

Pawlenty wanted the money to fix a shortfall in Minnesota’s budget.

Doyle said he offered to make half the payment early, but Pawlenty wouldn’t accept that.

He said Wisconsin had already adopted its next two-year budget when Pawlenty made the demand, and didn’t have the spare funds to meet it.

“It’s not a matter of one state or another getting more money over time,” Doyle said. “This is all about this one budget. We’ve abided by the agreement. We’ve lived up to all the terms of the agreement. Minnesota now wants to get the money in this two years.”

A bipartisan group of Wisconsin and Minnesota legislators met earlier this month to talk about how to get the agreement restored. It had allowed people working across the state line to file income taxes in only their home state.

Without the agreement, beginning in 2011, they will have to file tax returns in both states.

State Sen. Sheila Harsdorf, R-River Falls, co-authored a letter that was sent to both governors urging them to find a way to restore tax reciprosity.

“Our message at the meeting was that we wanted both governors to get back to the table to work out the differences – for the benefit of the people of both states,” Harsdorf said during Doyle’s visit to a new Hudson biotech company last week.

Doyle noted that only the Legislature could end the reciprocity agreement in Wisconsin. The governor has the power to cancel the agreement in Minnesota.

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