Gov. Mark Dayton’s new $1.2 billion supplemental budget calls for tax benefits that could be a big help for charities.
Lost in the much larger tax proposal is small change that would reduce sales taxes that non-profit groups pay to host fundraisers.
“This sales tax exemption is critically important for booster clubs that support our schools, helping raise funds for student enrichment activities like sports teams, chess clubs, and other school groups,” Dayton said.
The state has not adjusted that sales tax exemption for nearly 30 years.
Dayton’s tax plan would also allow people over 70 1/2 to transfer up to $100,000 from their individual retirement accounts to charities and exclude that amount from their income.
The proposal would also make it easier for individuals and businesses to donate food, land and money to charitable causes.
The House and Senate are now considering Dayton's budget plan, with Senate hearings set for next week.
Sunday liquor sale supporters in the Minnesota Legislature are taking no chances this year.
The bipartisan, bicameral team of Sen. Roger Reinert, DFL-Duluth, and Rep. Jennifer Loon, R-Eden Prairie, introduced seven different bills Thursday aimed at lifting or relaxing the state's longstanding ban on Sunday liquor sales.
"We are offering the Legislature a full spectrum of choices," Reinert, who pledged to have at least one of the bills out of Senate Commerce before the committee deadline, two weeks from now. "It is unreasonable to not make some progress on this in 2014, the 'unsession.' What better unsession issue than the repeal of a Prohibition-era ban that just does not fit in 21st Century Minnesota?"
The bills range from full repeal to proposals that would allow individual communities to decide for themselves whether they want to permit Sunday sales. There's also a proposal to place Sunday sales on the ballot as a constitutional amendment, and bills -- Reinert called them "baby steps" -- that would allow growler sales and allow tap rooms to open on Sunday.
Minnesota is one of only 12 states that does not allow liquor sales to open on Sunday. Every year, the issue comes up in the Legislature, and every year it either stalls in committee or gets resoundingly rejected by a floor vote.
The state's liquor lobby, and many small mom and pop liquor stores, have successfully argued that the ban could be bad for business. Instead of bringing in more sales, opponents say, it will simply spread six days of sales across seven.
Reinert countered that argument with a tongue-in-cheek bill that would ban Saturday liquor sales, as well as Sunday. Then, he said, liquor stores could concentrate six days' worth of business in just five.
"Now you have the same amount of expenses with just five days of expenses. Given the argument, I'm expecting a loud hurrah to come out of the (Minnesota Licensed Beverage Association), but somehow I don't think that's going to happen," said Reinert, noting that he has a list of 60 liquor stores around the state that support repeal.
"We know there's more momentum on this than we've ever seen at the Capitol," Reinert said.
"I have had members who have indicated to me that they are rethinking their position on the Sunday ban," Loon said. "And I think it's because of the range of options we've provided for members to consider."
The Minnesota Licensed Beverage Association issued a statement blasting the repeal effort, warning that the only way stores will do more business is if Minnesotans do more drinking.
“When government changes the ‘rules’ that a private business is operating under it will have an effect on many businesses,” the statement said. “Some may do better, but we believe many businesses will see no benefit from the change and will experience increased costs in doing business. Unless alcohol consumption increases, our mom and pop stores will see increased costs without increased revenues.”
The statement continued: “The Legislature has overwhelmingly listened to the concerns of small business in the past and defeated attempts to change the rules. We hope they will continue to support the local business in their districts.
The Distilled Spirits Council, by contrast, praised the repeal plans. Seventeen other states have legalized Sunday sales since 2002.
“Nationally, states are repealing outdated Prohibition-era alcohol laws to increase consumer convenience and generate new revenue without raising taxes,” DISCUS Vice President Dale Szyndrowski said in a statement. “We urge Minnesota lawmakers to consider passing Sunday sales for consumers, small business owners and the treasury.”
For Loon, the issue boils down to a question of economic freedom.
"Some liquor store owners may not want to be open on Sunday, and I'm not here to tell you they have to be, or that I want them to be," she said. "What I'm saying is that there are liquor store owners who would like to be open on Sunday and there are consumers who would very much like to patronize liquor stores on Sunday, if that's when it works out for them to do their shopping. This is a change that is needed."
Gov. Mark Dayton wants to earmark a giant share of the state’s $1.2 billion projected budget surplus for tax relief and to build up the state’s budget reserves.
The DFL governor wants $616 million in tax breaks for businesses and middle-class Minnesotans, including the repeal of three new sales taxes on warehousing services and telecommunications equipment and repair. The proposal also includes tax relief for married couples, Minnesotans with student loan debt and working families.
“Our improving economy has greatly improved the state’s budget forecast – giving us the opportunity to put more money in the pockets of Minnesota families and businesses,” Dayton said. “I urge members from both parties to work together to pass these tax cuts quickly.”
The proposal now goes to the DFL controlled House and Senate, where legislators have their own ideas on how to spend the money. The Minnesota House is expected to give final passage to a $500 million package of tax relief Thursday afternoon.
Republicans have been generally supportive of the tax relief, but blasted Democrats for imposing more than $2 billion in new taxes last year and then wanting credit for giving some of it back now.
"It's Minnesotans' money," Republican House Minority Leader Kurt Daudt said recently. "Give it back."
About half of the proposed tax relief would undo tax increases Dayton and Democrats imposed last year to beat down a more than $600 million deficit, repay debt to public schools and increase money for education.
Dayton said those choices were prudent then, but the state's robust economic growth gives them the chance to make revisions that make the tax system more fair.
“For those people who say we are not using wisdom in our mid-course correction based on changing circumstances, they are not in touch with reality,” Dayton said.
The significant windfall is adding a dose of election-year drama to the legislative session as both Dayton the House face voters in November.
The state has emerged from the deepest recession since the Great Depression and has been able to refill depleted budget reserves and pay back nearly $3 billion owned to public schools. For the first time in more than a decade, legislators have their first true surplus to divvy up. The extra money offers many advantages, but brings a lot of headaches as legislative leaders feel growing pressure from cash-strapped activist organizations that rely on state funding.
"There are a lot of needs out there that I am not addressing and there are people who are going to be unhappy with that, and I regret that," Dayton said.
Dayton is proposing eliminating the so-called marriage penalty, which means 650,000 married will no longer pay higher taxes than singles making the same amount of money.
He also wants to expand the working family credit, which would save the average Minnesota family $334 a year.
The governor is also pushing a plan to expand tax credits for child care, saving the average taxpayer who qualifies $430 per a year.
College graduates with student debt would save an average of $140 a year, under the plan.
The governor is also proposing streamlining business taxes to make them square with federal laws, vastly simplifying recording keeping for small businesses.
Dayton’s plan includes additional tax breaks for seniors, teachers, homeowners and veterans.
The governor wants to do away with a much-criticized new sales tax on repair and maintenance of farm equipment. He is seeking greater tax breaks for start-up businesses and entrepreneurs.
The governor’s proposal also seeks to modify the estate tax and eliminate the gift tax, which has been widely criticized.
The proposal doubles the exemption on the estate tax, to $2 million. Minnesota would no longer be one of just a couple states to impose a gift tax, under the plan.
Dayton is urging legislators to act in the next couple weeks, giving the state time to implement the changes before Tax Day. Many of the proposed tax breaks would be retroactive to 2013, such as the adoption credit and an income tax break for people who lost their home to foreclosure or a short sale.
"Minnesotans should know if the Legislature doesn’t act, it will cost them some of the tax savings I am proposing," Dayton said.
Dayton is not proposing making the marriage penalty retroactive, saying it would be too cumbersome to implement in the final few days as Minnesotans file their taxes.
The governor is seeking some new spending, about $162 million. Much of that money would go for raises for state-paid health care workers and extra money for low-income heating assistance.
Dayton would devote an additional $30 million to retain critical corrections staffers and pay for the state’s growing prison population.
He wants to set aside an additional $3.5 million to ensure that low-income students get a hot school lunch.
An additional $3 million would be set aside to pay for additional borrowing to fund statewide construction projects.
Dayton wants to use the remainder, about $455 million, to increase the state’s existing budget reserves of about $661 million.
Elected leaders have generally been comfortable with the existing reserve levels, but the last downturn showed that the amount was not nearly enough.
Minnesota Management and Budget Commissioner Jim Schowalter has said the larger reserve would give the state more cushion when the economy slides again.
The measure could also please the state’s credit agencies, which lowered the state’s credit-rating in recent years as the state relied on one-time accounting shifts and borrowing to nurse the state through the rough patch.
House Speaker Paul Thissen, DFL-Minneapolis, praised the proposed revisions to the state budget.
“Minnesota is headed in the right direction and the way to continue building on our progress is to expand middle class economic opportunity,” he said. “Governor Dayton’s supplemental budget has the right priorities to continue growing our economy from the middle out.”
After some blunt words and two days of tense meetings, legislative negotiators on minimum wage have reached an impasse for now.
Lawmakers are tied up with whether or not to add an inflationary bump to their move to phase in the proposed increase in the wage floor to $9.50 an hour by 2016.
Against a backdrop of national Democrats, including President Obama, Democratic campaign arms and several members of the Minnesota congressional delegation, pushing for a federal minimum wage hike, DFLers controlling the Minnesota House and Senate have reached what Rep. Ryan Winkler called a "stalemate."
"It doesn't look like we're making a lot of progress," Winkler, DFL-Golden Valley, told his fellow lawmakers as they attempted to negotiate a minimum wage compromise on Wednesday.
Since Monday, when Senate officials said for the first time they would support a minimum wage of $9.50 an hour, House and Senate officials have been unable to agree whether future minimum wage increases should be automatic.
Senate Majority Leader Tom Bakk, DFL-Cook, said on Tuesday that if the House insisted on including an inflationary bump, "there won't be a bill."
House Speaker Paul Thissen, DFL-Minneapolis, replied, "if the Senate wants to kill the bill, they should just tell Minnesotans directly."
While tempers appeared to have cooled publicly by Wednesday, legislators were still stymied over the question of inflation in minimum wage increases come 2017.
"The inflator is a non-starter in the Senate. I don't have the votes," Sen. Chris Eaton, a Brooklyn Center Democrat who is the Senate's chief negotiator, said on Wednesday.
The negotiators, who met every day this week, will not meet publicly again until Monday. Winkler suggested that in the interim it may be helpful for lawmakers to talk about creative approaches to dealing with the inflation question.
At least one DFL House member tried social media to move things forward:
If you live in Minnesota, and you care about a respectable minimum wage, you need to contact your state senator. Now. #RaiseTheWage— John Lesch (@johnlesch) March 5, 2014
Photo: A minimum wage rally at the state Capitol greeted lawmakers as they returned to session last week // Source: Glen Stubbe, Star Tribune
The Republican-led House of Representatives voted Wednesday to delay the tax penalty Americans will pay under President Obama’s healthcare law if they decline to sign up for coverage this year.
The bill passed with support from 27 Democrats, including Minnesota congressmen Rick Nolan and Collin Peterson, backing the legislation.
The individual mandate requires most Americans to be enrolled in health coverage by March 31 or pay a tax penalty. The House legislation would delay the fine for one year.
The bill is expected to stall in the Democratic-controlled Senate and would face a White House veto even if it succeeded.
Peterson, a conservative Democrat, has voted for similar measures before.
The Congressional Leadership Fund, a political action committee chaired by former Republican U.S. Sen. Norm Coleman, pounced on Nolan’s vote, calling it an “election year conversion.”
“He thinks he can pull a fast one on Minnesotans, right? With this vote, he’ll show them that he’s now protecting individuals from Obamacare, right?” an email from the political action committee read. “Except Minnesotans already know that Rick Nolan is an entrenched supporter of the health care law.”
Supporters of the GOP bill argue that individual consumers should be granted a delay because the Obama administration has postponed the implementation of several Affordable Care Act provisions that apply to businesses.
“No American should have to pay a penalty simply because the roll out of the Affordable Care Act has been so confusing. Moreover, if you’re going to give an exemption to businesses, you should also give an exemption to individuals. It’s only fair,” Nolan said in a statement. “We need to take the time to fix the enrollment glitches and get this right – and in the meantime allow the American people the common sense flexibility this one year delay provides.”
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