By Don Heinzman
ECM Editorial Contributor

Gov. Tim Pawlenty is performing a magic act on Minnesota taxpayers.

His political slight of hand on holding the line on state taxes is convincing the public that the state can balance its revenue needs without a tax increase and a 10 percent boost in state spending.

Heís not telling Minnesotans that his determination not to raise taxes at the state level will result in higher taxes at the local property tax level.

He and the Republican minority know that restricting aids to cities counties and school districts can result in another increase in property taxes. Some are predicting double-digit property tax increases on top of an average of double-digit hikes this year.

Local governments and school districts took a hit during the budget-cutting years and raised property taxes to pay their bills.

It should be noted that the state already gives $2.7 billion in aid to local units of government (LGA) and $6.5 billion to school districts for all relevant school costs, including general operating funds and special education

Even though rising property taxes were among the highest concern at the grassroots last fall, the DFL partyís attempt to get property tax relief was stifled by Pawlentyís vetoes and the Republican minorityís ability to sustain them.

The DFL majorities in both houses failed to get any substantial property tax relief, because the solution relied on taxing the incomes of the highest taxpayers.

Pawlenty insists that if the state is going to raise state taxes to give local governments more money, there has to be a tax cap at the local level where that idea is opposed.

Conservatives believe local school boards, city councils, township boards and county boards can best make taxing and spending decisions and take the political heat.

The problem is when local governments need money they have one major source-- the property tax, which is not based on ability to pay.

When Gov. Pawlenty vetoed the tax bill, he also eliminated millions of dollars in local government aid, which would have gone to cities.

He opposes LGA, because he says studies show itís not used to reduce property taxes.

The state, however, already spends $834 million in property tax relief to cities, counties and school district.

There are signs of unrest about property taxes at the grassroots level, as evidenced by the defeat of Republicans in the suburban districts during the last election.

Suburban and outstate taxpayers are upset because property tax relief was in a legislative bill that was vetoed by the governor, because it would have raised the tax on income of those who already pay the most.

Another stunning finding is that the property tax now is the leading funder of transportation projects, more than state and federal transportation funding combined. When cities and counties must maintain roads, they turn to the property tax.

One good piece of news is the $326 million that will go to school districts to help fund special education, reducing subsidies school districts are paying.

Still, small increases in the basic state aid formula of two percent and 1 percent over two years will have school boards scrambling to have property tax levies renewed and new ones approved

All this adds up to property taxpayers again shelling out for services the state is mandated to fund: transportation and K-12 education. There are signs of a property tax revolt at the grassroots but Pawlenty doesnít have to worry. He can work his magic at a higher level.