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House approves $2.6B tax bill, hikes alcohol tax, gives $338M to Mayo

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The Minnesota House on Wednesday narrowly approved a bill that would raise state taxes by $2.6 billion, in part by creating the state’s first alcohol tax hike in about 25 years.

The bill passed on a 69-64 vote, with four Democrats joining all Republicans voting against the measure.

“There’s a tax in here for almost everything,” Rep. Jenifer Loon, R-Eden Prairie, said, the Associated Press reported.

The Senate has not backed a new alcohol tax. The new alcohol tax, plus new taxes on corporations and certain high-income earners (this bill version takes aim at the top 1.1 percent, the Pioneer Press reports), would be used to dig the state out of its deficit and pay off debts to state school funds.

A slice of the money – $338 million – would also go to the Mayo Clinic in Rochester over several decades to help remake the city as part of Mayo's Destination Medical Center project, the Star Tribune reports. Mayo had requested $585 million.

“There’s lots to crow about in this bill,” said Rep. Kim Norton, DFL-Rochester, said, the Star Tribune reported. Mayo officials have vowed to put $3 billion of Mayo's own money into the project, matched by about $2 billion in private investment in downtown Rochester. Critics have questioned whether such a city-specific project merited big state spending.

The bill also generates revenue by raising taxes on cigarettes. Rep. Tina Liebling, DFL-Rochester, said that tax will prompt smokers to quit, MPR reported.

"This is a provision that will literally save lives," Liebling said. "There are very few of us on the House floor who haven't had a relative touched by the problems of cigarette smoking or other tobacco consumption can cause."

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