Dayton says Wisconsin owes Minnesota $58 million (UPDATE)

By Dinesh Ramde
Associated Press

Milwaukee — Minnesota officials said Thursday they were losing patience because Wisconsin has continued to delay paying $58.7 million it owes from an old tax-reciprocity agreement.

Under the agreement, taxpayers who lived in one state but worked in the other could file a single income-tax return. The agreement called for the states to reimburse each other, but Wisconsin always ended up owing Minnesota because more Wisconsin residents used the arrangement.

Minnesota Gov. Mark Dayton has asked the Minnesota Department of Revenue to draft a letter demanding Wisconsin pay up, Revenue Department spokeswoman Kit Borgman said Thursday.

“We understand they have cash-flow problems because so do we,” Borgman said. “We do value the relationship we’ve had in the past. We just want them to honor the agreement.”

Messages left with Wisconsin Gov. Scott Walker’s office and the Wisconsin Department of Revenue were not immediately returned.

Former Minnesota Gov. Tim Pawlenty dropped the 41-year-old tax agreement in 2009 when the two states couldn’t agree on a schedule for speeding up Wisconsin’s payments to Minnesota.

Wisconsin officials have offered to pay the outstanding balance July 1, but they haven’t put that in writing, Borgman said. Without a written offer, Dayton asked Borgman’s department to draft a demand, she said.

The letter was still being written Thursday and could be sent as early as this week, she said.

While the letter will include a request for payment, it likely won’t include any legal threats, Borgman said.

A message left with Dayton’s office inquiring whether legal action was being considered was not immediately returned.