With an insider’s eye, Hot Dish tracks the tastiest bits of Minnesota’s political scene and keep you up-to-date on those elected to serve you.

Contributors in Minnesota: Patrick Condon, J. Patrick Coolican, Patricia Lopez, Ricardo Lopez, Abby Simons, and Glen Stubbe. Contributors in D.C.: Allison Sherry, Jim Spencer and intern Beena Raghavendran.

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Rep. Greg Davids, House Republicans $2 billion tax cut legislation released

Posted by: J. Patrick Coolican Updated: April 18, 2015 - 5:37 PM

House Republicans' major tax legislation was released today, and, as promised, it offers up at least $2 billion in tax cuts to a range of Minnesotans, from income tax filers to Social Security recipients, military veterans to people with college debt, businesses and a plethora of other groups. 

A summary of the bill can be found here

"The overall direction is tax relief to middle-class Minnesotans. It's about helping seniors, military veterans, farmers and students," said Rep. Greg Davids, chairman of the House Taxes Committee and a Republican from Preston. Republicans will hold a news conference to discuss their plan Monday, and the House Taxes Committee will hold hearings on the Davids bill all week. 

The GOP tax plan will face stiff resistance from DFL Gov. Mark Dayton, who has proposed spending much of the projected $1.9 billion surplus on education and especially pre-kindergarten. The DFL-controlled Senate's budget targets are similar to Dayton's. 

Davids said the biggest items in the bill include a $1,000 exemption for all income tax filers. A more modest form of Dayton's proposal for a child care tax credit is also included. Families with significant estates will get a break, as will Social Security recipients, retired military veterans, teachers seeking graduate degrees, doctors who perform charity care, buyers of propane tanks, cigarettes and bullion coins and many others. 

Davids said last year he was unpersuaded about the problem of student debt, but became convinced a refundable tax credit on college loans, though a major hit to the state treasury, would draw new professionals from out of state and keep young Minnesotans here.  

The bill also includes all the provisions of a major bill authored by Property Taxes and Local Government Finance Chairman Steve Drazkowski, R-Mazeppa, which cuts taxes, especially for farmers and businesses that own property and Minnesotans with seasonall cabins. That legislation has come under fire from many metro legislators because it cuts $85 million from local government aid, but only to Minneapolis, St. Paul and Duluth, which are DFL strongholds. 

The Drazkowski bill will cost $363 million over the biennium, but because it phases out the commercial and industrial statewide levy over seven years, state coffers would take a ballooning hit over the longer term. 

The Davids' tax legislation would also require significant offsetting cuts in government or increases in different revenue in the longer term because the cost of many of the provisions would increase over time.

Davids said his experience as House Taxes chairman in 2011, when the state faced a $6 billion deficit, made him keenly aware of the dangers of long term structural deficits. "I don't want the state to be in that situation again," he said.  

Senate Majority Leader Tom Bakk, DFL-Cook, has said he will not repeat his own experience of voting for tax cuts in the 1990s, only to see the state's budget in frequent crisis during the following decade. 

Update: House DFL Minority Leader Paul Thissen released a statement that read, in part, "Republicans have made a choice that tax cuts for corporations and special interests are more important than educating our kids or investing in Minnesota's future." 


Rep. Steve Drazkowski's property tax bill gives tax cuts to farmers, businesses

Posted by: J. Patrick Coolican Updated: April 17, 2015 - 2:39 PM

A massive property tax bill that was making its way toward passage of a House committee this week offers big savings to farmers, businesses, industrialists and cabin owners, while also pushing bold policies like giving local voters a chance to undue a levy tax increase with a "reverse referendum."  

Rep. Steve Drazkowski, R-Mazeppa, who is chairman of the Property Tax and Local Government Finance Division, is also known as a leader of the conservative wing of the Republican caucus. 

The biggest item in the proposal is a major exemption and eventual phase-out of the commercial and industrial statewide property levy, which is a tax on businesses but also seasonal cabins. The measure would exempt the first $500,000 for commercial and industrial properties and the first $200,000 of seasonal cabins. It would cost state coffers $433 million during the biennium. The eventual phase-out would drive costs of the tax cut higher in the future, with a price tag of $917 million in the second biennium that would continue to grow.

The bill also tries to address the high cost of school bond levies for agriculture interests by providing a refundable income tax credit for farmers equal to 50 percent of the property tax they pay attributable to school debt levies. 

The bill would save some money by reducing local government aid to just three cities, Minneapolis, St. Paul and Duluth, by a total of $85 million. 

The total cost of the bill is $363 million over the biennium. 

The House Taxes Committee is expected to incorporate these tax changes into its major bill, which Republicans say will offer $2 billion in tax cuts, in the coming days. 

MPCA's John Linc Stine writes sharply worded letter to Rep. Denny McNamara

Posted by: J. Patrick Coolican Updated: April 15, 2015 - 4:15 PM

The commissioner of the Minnesota Pollution Control Agency has written a sharply worded letter to the Republican chairman of the House Environment Committee, laying out a series of objections to environment legislation unveiled this week. 

Rep. Denny McNamara's bill funds key environment agencies while also making significant policy changes to the way Minnesota protects its air, water and land. 

John Linc Stine, the PCA commissioner, faults the bill for taking money from various dedicated cleanup funds to pay for agency operations and for provisions that would "reduce activities that protect public health and the environment." 

The committee will hear testimony this evening and amendments Thursday before expected passage later this week.  

House GOP pushes $85 million state aid cut to Twin Cities, Duluth

Posted by: Patrick Condon Updated: April 15, 2015 - 12:13 PM

The cities of Minneapolis, St. Paul and Duluth would see a combined drop of $85 million in local government aid from the state of Minnesota under legislation being pushed by the Republican majority in the state House.

"Frankly, the premise behind LGA (local government aid) is that cities that don't have the tax capacity would get assistance in infrastructure and basic functions of the city," said Rep. Duane Quam, R-Byron, who introduced the measure. "You've got these cities where a large portion of their budget is coming from LGA."

Quam's provisions have been included in a broad package of property tax changes that's under consideration Wednesday in the House Property Tax and Local Government Finance Division. Rep. Greg Davids, chairman of the House Taxes Committee, said the LGA cuts were likely to be included in his House tax bill, which is set to be unveiled next week. 

"You wonder how it got to the point that Minneapolis, St. Paul and Duluth are getting so much more than other cities across the state per capita," said Davids, R-Preston. 

Under the House GOP proposal, Minneapolis would see its yearly LGA allotment cut by $40 million a year. That's more than half of the total LGA payment to Minneapolis in 2013 of $64 million. St. Paul's LGA would be cut by $34 million, after getting $50 million in 2013; and Duluth, which got $27 million in 2013, would take an LGA cut of $20 million. 

"Our entire fire department budget is $14.8 million," David Montgomery, Duluth's chief administrative officer, told the House panel. "We could eliminate our fire department completely and we would still have to find $5 million to cut." 

The money would not be shifted to smaller cities but rather cut entirely from state spending rolls. The House GOP property tax proposal, assembled by Rep. Steve Drazkowski, includes significant reductions in the state's commercial/industrial property tax, state property taxes on seasonal recreational property, and property tax reductions for farmland owners. 

Quam noted that the other Minnesota city defined as "first class" under state law -- Rochester -- gets significantly less in LGA than the other three cities. In 2013, it was $5 million. LGA rates are determined by a complex formula that considers local tax capacity per capita, but also considers various "need" factors over which city officials have little control, like the age of housing stock and amount of property that's exempt from tax rolls. 

Still, the LGA reductions face significant opposition in the state Senate, where the DFL majority is comprised of numerous members from Minneapolis, St. Paul and Duluth. There are no House Republican members from any of those cities. 

Tempers flare in House Environment Committee

Posted by: J. Patrick Coolican Updated: April 15, 2015 - 10:36 AM

A major fault line between Republicans and the administration of Gov. Mark Dayton revealed itself today in a House committee, where Rep. Denny McNamara, R-Hastings, began hearing testimony on his major environment budget bill. 

The heads of four state agencies with responsibility for protecting Minnesota's environment stated their opposition to the bill, saying it would fund their agencies in part by shifting money from special cleanup funds. 

McNamara, the Republican chairman of the House Environment and Natural Resources Policy and Finance Committee, alleged that the agency heads were not being transparent about administration pots of money.

"My frustration is I don't know what's in the bill!" he exclaimed in the hearing room, packed with lobbyists, activists and agency staff. 

The bill also includes a number of contentious policy changes opposed by the Dayton administration, including provisions that would give the Legislature the power to approve or disapprove new environmental regulations. 

The committee will continue to hear testimony this week and will likely pass the bill to the full House. 



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