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.
If low-income children can't afford a nutritious, hot lunch, the state of Minnesota should pick up the tab, the House Education Finance Committee decided Thursday.
After reports that more than half the public school districts in Minnesota deny hot lunches to students who can't pay for them, the Legislature is rushing to find the $3.5 million it would take to expand the state's free lunch program to the thousands of low-income children enrolled in the reduced-price lunch program.
"This is a great opportunity to, in a bipartisan manner, make the statement that no child shall go hungry in Minnesota because of an inability to pay," said Rep. Yvonne Selcer, DFL-Minnetonka, who sponsored legislation that would let the state cover the cost of expanding free lunches to the thousands of students in the reduced-price lunch program.
A searing report by Mid-Minnesota Legal Aid last month found that a majority of school districts substitute cold sandwiches, or no lunch at all, when students run out of money in their lunch accounts. Some sent children home with hand stamps or stickers to alert parents that they had come up short. The districts noted that they often continued to provide the lunches long after the money ran out, which led to large deficits in their own budgets.
Right now, families in the low-income lunch program, pay 40 cents per child per meal, which might not sound like much, but can add up for families and districts alike.
Selcer offered a hypothetical: A single parent with two children, earning $32,000 a year, wouldn't qualify for any other supplemental food assistance, like SNAP, and would be left with a monthly food budget of about $51 a month. Any expense, like a car repair, could erase the family's entire school lunch budget, she said.
"A child who has decided not to have lunch, because he or she knows that mom and dad hasn't paid this month's lunch bill, is more likely to go home and overeat on the starchier foods that the family can afford," Selcer said. "That child is less likely to do well academically at school, as we know that good nutrition plays a huge role in learning."
The legislation would shift the cost of lunch to the state and mandate districts to provide nutritious hot lunches to low-income children, regardless of their parents ability, or willingness to pay.
The committee signed off Selcer's bill by voice vote Thursday morning. It now moves to the House Ways and Means Committee. Gov. Mark Dayton also included the lunch money in his budget request.
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.”
Gov. Mark Dayton’s administration rolled out a comprehensive government streamlining package Tuesday, outlining more than 1,000 proposed changes to make state services easier and more efficient.
The overhaul seeks changes in every corner of state government, from speeding environmental permitting to making it easier and faster the buy fishing licenses and pay taxes. The initiative also seeks to root out antiquated laws clogging up the books and adding work for state agencies.
Iron Range Resources and Rehabilitation Board Chairman Tony Sertich, who is leading the streamlining effort for Dayton’s administration, said state law is filled with antiquated provisions. He noted one state law even has a detailed prescription of exactly who must capture or kill wild boars in the state.
Dayton is staking a lot of political currency on the outcome of the initiative, which he calls “unsession.” He wants legislators to devote a significant amount of time weeding out antiquated or cumbersome laws.
But Dayton is not merely trying to declutter the state law books. He wants to make it easier and less aggravating for consumers of state services, which has been a frequent gripe when dealing with state government.
Dayton is not the first governor to try such an effort, but it is the most concerted one in a long time.
In selecting Sertich to lead the effort, Dayton has tapped a former House Majority Leader with a strong sense of how to get things through the sometimes unruly legislative bodies.
Dayton’s top policy advisers have been meeting regularly and touching base with legislative committee chairs, who will be vital to the success or failure of the effort.
Legislative committees will begin holding hearings on the streamlining measures this week.
A new report by the Minnesota Department of Revenue shows that property taxes held steady this year, down about $8 million after all state property tax refunds.
“This drop in property taxes is good news for Minnesotans, who for years have been hammered by double-digit property tax increases," DFL Gov. Mark Dayton said. "Thanks to the relief provided by the DFL Legislature last year, property taxes are actually going down statewide, for the first time in 12 years."
The amount of savings is less than Dayton and Democratic legislators predicted last year, but Minnesota Department of Revenue Commissioner Myron Frans called it “great progress.”
Republicans had warned that Democrats' desire to lower property taxes by increasing aid to local governments wouldn’t work, arguing that cities and counties would merely bulk up their budgets without lowering local property taxes.
"Despite Democrats repeated promises to reduce property taxes, Minnesotans learned today they are facing the highest property tax levy in state history,” said Hanska Rep. Paul Torkelson, the Republican lead on the House Property and Local Tax Division Committee. “Governor Dayton and Democrats set the target and they missed. After Democrats took $2.4 billion in new taxes and fees this past session, hardworking taxpayers can't afford to pay more."
Revenue Department officials found that city, county and school levies went up about $125 million this year, but that was before $133 million in state property tax aids and credits were returned to taxpayers.
Since 2002, property taxes rose an average of $332 million each year, according to the Revenue Department.
Frans said the state has finally broken the cycle.
“Overall, the number is one we are pretty satisfied with,” he said.