Republicans Pass Lighter Tax-relief Bill

Minnesota legislative Republicans pushed bills that would deliver $46 million in tax cuts and freeze Local Government Aid to cities.

House Tax Chairman Greg Davids, R-Preston, said the GOP listened to what Democratic Gov. Mark Dayton said after vetoing a $200 million tax-relief bill Friday and crafted a new plan he could accept. Dayton was not involved in talks leading to the bill that was released Wednesday morning and later passed by the House.

The bigger tax measure awaited a late-Wednesday night Senate vote; senators approved a smaller one after midnight Wednesday.

As the 2012 legislative session neared its end, Republicans tried to pass at least some measure of tax relief, one of their top priorities.

One of Dayton’s objections to the earlier bill was that it would take nearly $44 million out of the state’s budget reserve. Davids said the new plan should be acceptable because it just removes $28 million.

Much of the debate on one of the two bills centered on Local Government Aid, state payments to cities.

“No one loses a dime,” Davids said.

However, Rep. Paul Marquart, DFL-Dilworth, complained that Davids’ bill cuts LGA from what many cities had expected to receive, such as $238,000 from Red Wing, $237,000 from Grand Rapids and $105,000 from Redwood Falls.

“There is no significant relief here,” Marquart said. “There is no help for our senior citizens. There is no help for our farmers. There is no help for our families.”

But Davids said if his bill failed some cities in Marquart’s district, for instance, would lose money: Breckenridge, $33,000; Browns Valley, $5,800; and Detroit Lakes, $85,000.

Cities smaller than 5,000 generally would receive more under the GOP plan while others’ LGA would be frozen. Davids said more than 600 small cities would do better under his bill.

Davids called his original tax bill “smokin’ hot,” but after the veto he termed it “Davids light.”

The bill would freeze a statewide business property tax for a year, saving businesses $10 million. It also would allow tax credits for people who invest in startup companies and give sales tax exemptions for small business equipment purchases.