See more of the story

The Minnesota Senate is downsizing and reshaping the Mayo Clinic’s $585 million funding request.

The Senate Taxes Committee meets Friday to consider a revised proposal, drawn up with Mayo’s blessing, that cuts $60 million from the request and pays for it out of the state’s general fund, rather than using dedicated state and local tax receipts. The House, meanwhile, is working on its own “Plan B” revision of the Mayo bill.

Mayo officials said they are cooperating with legislators to address concerns about the project’s size and funding sources, including whether Rochester is paying its fair share of the cost. The health care giant, Minnesota’s largest private employer, is hoping to expand its Rochester campus and remake the city’s downtown to create a “Destination Medical Center” that could compete with world-class institutions such as the Cleveland Clinic and Johns Hopkins.

Mayo is pledging to put up $5 billion of its own money and outside private investment dollars, if the state comes up with the money to pay for improvements such as new roads and parking.

“We’re happy that it’s still moving forward,” Mayo spokesman Karl Oestreich said. “For us, that is the ultimate goal. What form the bill eventually takes is less important.”

Senate Taxes Committee Chairman Rod Skoe, DFL-Clearbrook, said the Mayo project needed revision because he was uncomfortable creating a new way of using public money to help finance private development projects.

“We like to do things so we do not establish new precedents,” he said. “It’s not the final version. We’re going to keep working on it.”

The new Senate plan, the Associated Press reports, calls for private investors to commit at least $150 million and local governments to pledge $60 million before any state contributions are made. The state’s share for public infrastructure is capped at $525 million.

Gov. Mark Dayton’s chief of staff, Tina Smith, said that she, Skoe and House Taxes Committee Chairwoman Ann Lenczewski have been working closely with Mayo and Rochester officials to come up with a plan everyone can live with. After reviewing the Senate proposal, Smith said it represents “the direction we have all been heading. ... This seems like good progress.”

In the House, meanwhile, state Rep. Kim Norton, DFL-Rochester, is working on her own “Plan B” version of the Mayo bill, after Lenczewski make it clear that the bill would not pass her committee without making changes to its financing structure and shifting a greater share of the cost to the greater Rochester community. Norton plans to bring her revised bill back to the House Taxes Committee next Tuesday.

“We’re planning on working over the next three days to get things ironed out on our side,” Norton said.

Norton and Skoe agreed that the House and Senate bills are likely to have significant differences.

One point the House and Senate bills will share is the decision to wrap the Mayo bill into the omnibus tax bills. That would leave Rochester-area Republicans with the uncomfortable choice of voting against the Mayo spending or for legislation that likely will include $2 billion in new taxes.

“If I had a project like this in my area, I would be voting for the [tax] bill,” Skoe said. “If a $500 million economic development project in your hometown is not important enough to actually pay for? That’s the difference between us and them. When we do these things, we actually pay for them.”

On Thursday, a group of Senate Republicans appealed for the Mayo bill to remain a free-standing bill, not linked to the tax omnibus measure.

“I can’t vote for $2 billion in new taxes. I can’t do that,” said Senate Minority Leader David Hann, R-Eden Prairie. “If the idea is to trick legislators in some way to voting for something ... should that be how we do something like this?”

“I don’t think any legacy bill like that should be held hostage in a partisan omnibus tax bill,” said Sen. Carla Nelson, R-Rochester.

“That really disappoints me” Skoe countered. “There’s nobody who’s been working harder for this than the farmer from Clearbrook and the carpenter from Cook,” he said, referring to Senate Majority Leader Tom Bakk, DFL-Cook. “If you want it to move forward this year, it’s got to be in the tax bill.”

Staff writer Baird Helgeson contributed to this report. Jennifer Brooks • 651-925-5049