Tax season is tough enough for most of us, but it’s even more stressful for anyone along the Minnesota-Wisconsin border who lives in one state but works in another.

Residents who cross the border for their jobs must file two state income tax forms every year. Business owners are just as burdened because they have to keep two sets of tax records for employees who live across the border.

That wasn’t the case for more than 40 years when Minnesota and Wisconsin had a tax reciprocity agreement allowing border-crossing commuters to file one state income tax in their home state. Because Wisconsin has a higher number of commuters, the state made payments to Minnesota to compensate for the amount Minnesota would have received by taxing Wisconsin residents.

That came to an end in 2009 when Gov. Tim Pawlenty canceled the agreement in the throes of the recession, citing late payments from Wisconsin. The two states also disagreed over how much was due. In the intervening years, there have been negotiations between the administrations of Gov. Mark Dayton and Wisconsin Gov. Scott Walker to revive tax reciprocity, but they ended in a stalemate because they could not agree on the amount. For example, the Minnesota Department of Revenue said it was due $92.5 million in 2015, while Wisconsin said the amount was $87.3 million.

Minnesota House Tax Committee Chairman Greg Davids, R-Preston, has introduced a bill to reinstate the reciprocity agreement. The Senate version is being carried by Sen. Jeremy Miller, R-Winona. This isn’t the first time the legislators have introduced legislation to address an issue that affects their constituents deeply.

“I will make every effort to restore reciprocity this session,” Davids said after a committee hearing on the bill. While the Dayton administration hasn’t agreed to Davids’ proposal, we will take Revenue Commissioner Cynthia Bauerly’s word that she “wants to work with him on his bill.”

It’s about time. Six years have passed, and it’s long overdue for the spat over tax reciprocity to be resolved.

During the hearing, some legislators, basking in the news of Minnesota’s projected $1.87 billion surplus, questioned Wisconsin’s ability to pay because it faces a $283 million budget deficit this year. Wisconsin Revenue Commissioner Richard Chandler said “we’ll be a very reliable partner” because Gov. Walker’s budget proposal includes restoring reciprocity payments to Minnesota.

The numbers the legislators should be focusing on are the 56,000 Wisconsin residents who work in Minnesota and the 24,000 Minnesotans commuting to jobs in Wisconsin. Locally, about 464 workers in Olmsted County commute from Wisconsin, according to an estimate from the Rochester-Olmsted Council of Governments. The Winona County Economic Development Authority says its most recent figures have 3,801 Wisconsin residents commuting or telecommuting to work there, with 1,821 Winona County residents working for Wisconsin employers.

While it’s too late to implement a new reciprocity agreement for this year’s tax returns, legislators should pass the measure this session. It would allow the two states time to change tax forms and withholding instructions and it would give employers time to adjust taxes to be withheld for next year’s filing deadline.

When we talk about the border battle between Minnesota and Wisconsin, it should be about Gopher and Badger sports, not about the 80,000 taxpayers who are burdened to file in two states.

 

— Rochester Post-Bulletin, March 12