More than 1.2 million Minnesotans will get tax breaks under a sweeping tax relief proposal the Legislature overwhelmingly approved and Gov. Mark Dayton signed Friday.
Working families, married couples and those who adopted children will be among the biggest winners in a proposal that includes more than $444 million in permanent tax relief, including about $57 million that will be retroactive for 2013.
After passing the Senate 58-5, the House passed it 126-2. Dayton quickly signed the bill into law Friday night.
“The urgency was apparent,” Dayton said, during a celebratory press conference with DFL House and Senate leaders.
“This is a monumental victory for the DFL leadership in the Legislature and just shows that we have a balanced approach in Minnesota. That’s what people wanted," Dayton said.
Revenue Commissioner Myron Frans said that his staff would work through the weekend to put the tax cuts into place.
“If you have not filed your tax return yet, we would advise you to wait until Monday,” Frans said.
He said that the department will contact Minnesotans who already filed who would be eligible for refunds to make sure they get the money back that they deserve. About half of Minnesotans have already filed their 2013 tax returns.
Among those who may be eligible for tax breaks: college students, educators, lower income families and those with mortgage insurance deductions. A one-day delay, forced by Senate Republicans' unwillingness to vote on the measure the same day it was first released, will not change anyone’s eligibility for tax breaks, Frans said.
Legislators are also racing to finish the tax proposal to repeal new business sales taxes, including a much-criticized levy on warehousing services that is set to take effect in about a week.
Democrats, who control both chambers of the Legislature, are paying for the tax relief from a $1.2 billion budget surplus. This is the first windfall in years that wasn’t already earmarked to replenish reserves or repay billions the state borrowed from public schools to balance the budget during the last recession.
Along with the tax cuts, lawmakers added $150 million to the budget reserves, bringing the state’s rainy-day fund to more than $800 million. The state’s budget reserves are far below what is recommended by national credit-rating agencies, which have downgraded the state’s credit rating due to the low reserves and reliance on one-time accounting shifts and borrowing to balance.
Republicans have sharply criticized the increased budget reserves, saying the money is better off in the pockets of taxpayers than in the state bank account.
“They will spend it more wisely than government every day of the week,” said Sen. Julianne Ortman, R-Chanhassen. “And they will get a better return.”
State Senate Republicans want to increase tax relief for Minnesotans this year by proposing more than $360 million in permanent sales tax relief.
“Sales taxes affect everybody,” said Senate Minority Leader David Hann, R-Eden Prairie. Sales tax relief “is abundantly fair.”
Senate Republicans want to lower the state sales tax rate to 6.375 percent, from 6.875 percent.
The proposal comes as DFL leaders who control the Senate finalized more than $500 million in tax relief for consumers and businesses. The measure is expected to get a final vote Thursday.
Legislators are wrestling with a $1.2 billion projected budget surplus, which comes largely from the state’s strong economic performance.
Republicans have argued that Democrats raised too many new taxes last year. They have proposed returning nearly all of it to taxpayers, which could dramatically wipe out projected surpluses in the following years and potentially send the state into deficit again.
Senate Democrats are taking a more cautious approach and are trying to spend the money in ways that doesn’t blow a monster hole in the budget it future years. The Senate strongly supports using some of the surplus to bolster the state’s reserves by another $150 million, bringing the state’s rainy-day fund to around $750 million.
Senate Taxes Committee Chairman Rod Skoe said he does not want a repeat of the last decade, where the state was locked in cycle of deficits and emergency budget cutting that damaged the state's credit rating.
“We don’t want to go through that again,” said Skoe, DFL-Clearbrook. “A little bit of caution is in order.”
Republicans oppose building up the reserves, saying the tax money should be in the economy, not sitting in the state’s bank account.
“We are better off letting people keep their money in their pockets,” Hann said.
A new report finds that both the successful campaign to legalize gay marriage and the unsuccessful campaign to stop cigarette and tobacco tax increases spent more than $1 million on lobbying in Minnesota last year.
The report, released Tuesday by the Minnesota Campaign Finance and Public Disclosure Board, shows that the pro-gay marriage Minnesotans United and the Altria Client Services, the parent company for Philip Morris, joined the million dollar spenders for the first time in 2013.
Also appearing on the big spender list -- business groups and the teachers union. With spending of more than $2 million, the Minnesota Chamber of Commerce was the single biggest spender on lobbying, as it often is.
Reports to the campaign watchdog agency found that both the Chamber and the Minnesota Business Partnership increased their spending last year. The chamber spent $100,000 more than it had in 2012 and the Business Partnership spent $600,000 more. The Business Partnership spent a total of nearly $1.5 million in 2013.
The two business groups successfully batted back massive proposed business-to-business tax increases in 2013. Some smaller tax increases on businesses transactions with other businesses did pass, however, This year's Legislature is looking at repealing those.
Education Minnesota's lobbying spending came in just behind the business groups, with $1.2 million in spending on lobbying. That, too, constitutes an increase from the year before but is still slightly less than the massive teacher's union spent in 2009.
See all the big spenders in the list below:
Gov. Mark Dayton said on Tuesday he was "very, very, very disappointed" that the DFL Legislature has not yet delivered a tax cut bill to his desk and laid the blame squarely on a tiff over a proposed new Senate office building.
The tax cut measure, which the DFL controlled House has already approved, would bring tax cuts to businesses, students, newly adoptive parents and people who have gone through foreclosure. The governor called for immediate action so that Minnesotans who file tax returns by the April 15 deadline would see the savings.
The DFL governor, making his first Capitol appearance since his early February hip surgery, said it is "unacceptable" that the Legislature has not yet allowed him to put the tax cuts in law.
He said the delay was all the fault of his fellow Democrats, "which is unfortunate."
The root of the problem, as Dayton described it, is a dispute over a $90 million Senate office building and parking ramps.
Senate Majority Leader Tom Bakk, DFL-Cook, has made clear he wants the House to finish its sign off on the building plans. The House has not yet been willing to do so.
Dayton said that difference has caused the Senate to delay passage of the tax cut bill.
Last week, Bakk flatly denied that he was blocking progress on other issues for sake of the building, claiming such a thought never even occurred to him. Dayton made clear Tuesday he did not believe that.
On Tuesday, asked if he was responsible for the current conundrum given that he accepted a tax bill that included the business taxes he now wants to dump, the Senate office building and did not include the tax cuts for middle income Minnesotans he now demands, Dayton's answer was simple.
"Sure," he said. He added: "And I'm doing everything to correct it now."
Democratic U.S. Sen. Al Franken is resurrecting his proposal to pay for hot school lunches for students who get reduced-priced meals.
“We should really be committed to making sure kids don’t go hungry at school,” Franken said in an interview with the Star Tribune. "It's just wrong."
Franken had lunch Monday with students at Meadow Lake Elementary School in New Hope, saying research is clear that students learn better when they are well nourished.
A member of the Senate Education Committee, Franken introduced the proposal in 2009 and again in 2010, but the measures never became law.
Right now, students whose parents make between 130 percent and 185 percent of the federal poverty lines qualify for reduced-priced lunches of 40 cents per meal. Under the proposal, the taxpayers would pick up the tab for those lunches.
It is not clear how much the proposal would cost or how many students would be affected.
One of Franken’s GOP challengers, Mike McFadden, said the issue highlights the differences between the two.
Franken, he said, looks for a federal solution to something that state leaders are already about to tackle.
“We should really look to the state or local government,” McFadden said.
State Sen. Julianne Ortman, Franken’s other GOP challenger, did not immediately respond to a request for comment.
DFL Gov. Mark Dayton and legislators are rushing passage of a proposal to have the state pick up the tab for students whose parents can’t pay for reduced-price lunches.
Recent news stories outlined how some Minnesota school districts only offered low-income students cheese sandwiches when their meal accounts ran dry.
Dayton and legislators from both parties said that is completely unacceptable.
The Minnesota House voted overwhelmingly to set aside $3.5 million to pay for those lunches. The Senate is expected to follow suit.
Franken said if his measure becomes law, the federal government would take over the state’s share of the lunches.
“Kids don’t do as well when they are hungry,” he said.
Star Tribune photo by Elizabeth Flores
|Vikings (7)||Health care (1)|
|1st District (131)||2nd District (126)|
|3rd District (103)||4th District (75)|
|5th District (149)||6th District (520)|
|Funding (655)||Health care (218)|
|Minnesota U.S. senators (510)||Minnesota campaigns (1370)|
|Minnesota congressional (747)||Minnesota governor (1625)|
|Minnesota legislature (1893)||Minnesota state senators (797)|
|National campaigns (460)||President Obama (363)|
|State budgets (803)||Celebrities (1)|
|Anoka (1)||Fridley (1)|
|2012 Presidential election (321)||7th District (86)|
|8th District (194)||NHL news (1)|
|Gov. Tim Pawlenty (451)||Political ads (84)|
|Recount (95)||Gov. Mark Dayton (1162)|
|Democrats (975)||Republicans (1129)|
|Morning Hot Dish newsletter (57)||Sept11 (1)|
|Public safety (2)||Marriage Amendment News (1)|
|Voter ID News (2)||Budget news (4)|