Cities that border Dakotas want continued state support

Hutchins, with Rep. Paul Marquart in background

Hutchins, with Rep. Paul Marquart in background

Minnesota legislators who regularly complain that North Dakota and South Dakota lure business away with lower taxes are considering renewing a law in effect since the mid-1980s that gives five western Minnesota communities money to compete with their neighbors to the west.

Deputy City Manager Scott Hutchins of Moorhead told House and Senate committees Wednesday that his community, Dilworth, East Grand Forks, Breckenridge and Ortonville use tax reductions to attract businesses that otherwise could have gone to one of the Dakotas. Money also is used to keep firms in their communities.

“These disparities have only grown greater over time,” Sen. Kent Eken, D-Twin Valley, said.

Lawmakers discussed the bills Wednesday, and in both chambers they are expected to be folded into overall tax bills due to pass before the May 18 legislative adjournment date.

The current two-year state budget provides $750,000 a year to the five cities, and bills sponsored by Eken and Rep. Deb Kiel, R-Crookston, would up that to $1 million.

“We actually could use more than a million,” Eken said.

In Moorhead alone, more than $300,000 in tax cuts is used to provide businesses aid to make up for Minnesota’s more expensive workers’ compensation program.

Hutchins provided legislators a workers’ comp comparison showing the per-employee premium for a sugar refinery worker in Minnesota is $5,458 while North Dakota charges $957. To help make up that difference, Moorhead used the state program to lower American Crystal Sugar taxes $25,000 last year.

The five cities also help some of businesses because Minnesota taxes are higher than North Dakota. For instance, a Fargo business would pay nearly 20 percent lower property tax rates than one in Moorhead and a Grand Forks business would pay 8 percent less than in East Grand Forks.

East Grand Forks used some of its money to help build a $5 million, 67-bed hotel. Dilworth provided aid to a dentist business expansion and to lure an international corporation, which will have 100 employees, that conducts prescription drug trials.

Kiel said the five cities are the only ones on the border with one of the Dakotas, or in Dilworth’s case adjacent to Moorhead.

“They are right there,” she said. “It is easy to go across the border.”

Kiel said that the bill could help East Grand Forks attract businesses that support the Grand Forks Air Force Base’s new mission of controlling drone aircraft. The border cities bill, she said, could put East Grand Forks on more equal footing with Grand Forks when recruiting businesses.

Strong support for the Kiel-Eken provision came from Bloomington Democratic Rep. Ann Lenczewski, who when she was House Taxes Committee chairwoman included the program in her tax bills.

“With a big (state budget) surplus, we might have a chance to prioritize this,” she said. “This is extremely important.”

Senate Taxes Chairman Rod Skoe, D-Clearbrook, said: “We have a couple hundred businesses, more or less, that participate.”


Legislative notes: Budget forecast due Friday

A report that gives Minnesota’s governor and legislators information they need to write a two-year budget will be released Friday.

The so-called budget forecast will look at the economy and revenues coming to the state and predict funds available in the next budget cycle.

Gov. Mark Dayton already has released his budget plan, as required by law, but will tweak it after the Friday report. Legislative leaders will develop their budget based on the Dayton plan and Friday’s forecast, likely with considerable differences from the governor.

An early December forecast predicted the state will have a $1 billion surplus, but good economic reports since then have led many state officials to predict better news Friday.

The actual surplus numbers will be a tightly held secret until Friday morning.

Hemp legalization bill advances in Minnesota House

An effort to legalize hemp in Minnesota continues.

A state House committee Wednesday unanimously approved a bill by Rep. Mary Franson, R-Alexandria, to allow limited hemp growth. Hemp farming has been illegal in Minnesota since shortly after World War II.

Franson’s bill would allow hemp as a crop if the producer is licensed by the state Agriculture Department and follows federal law, which now only allows researchers to grow the plant.

Hemp is used for products ranging from ropes to clothes.w

It was declared illegal due to its close relationship with marijuana, although using hemp would not make a person high.

Franson said Minnesota hemp farming has a lot of potential and her bill would develop “on a very small scale” the beginnings of a hemp industry in the state.

A similar Senate bill passed its first committee test last week.

Phasing out Social Security tax on seniors considered

A Minnesota House committee dealing with aging Minnesotans voted Wednesday to phase out the tax the state charges on Social Security benefits.

The House Aging and Long-Term Care Policy Committee sent five bills to get rid of the tax to the Taxes Committee.

If Social Security were not taxed, the average Minnesota senior citizen would save $600 a year, the committee heard.

Most states do not tax Social Security.

Supporters of the bills testified that getting rid of the tax would help Minnesota’s elderly afford to live in their own homes longer.

The bills vary on how long it would take to phase out the tax, with two taking 10 years and the others less time.

Legislative notebook: Smoking drops

Fewer Minnesotans are smoking.

The Department of Health Thursday reported that new study results show smoking fell 14.4 percent since 2010.

“We know that many factors, including tobacco price increases, smoke-free policies, cessation programs and media, combine to reduce smoking prevalence over time,” said Dr. Raymond Boyle of ClearWay Minnesota, an anti-smoking organization that co-sponsored the study. “The new … data suggest that Minnesota’s long-term investment in addressing tobacco use is paying off.”

Nearly 63 percent of smokers surveyed said that a 2013 cigarette tax increase influenced them to try to reduce or quit smoking.

About 580,000 Minnesotans continue to smoke. Those who smoke generally have lower incomes than nonsmokers, more men smoke than women smoke and those who have not graduated from high school have the highest smoking rate.

“Minnesota has made great strides in reducing tobacco use through important health policies, but we can’t become complacent,” Health Commissioner Dr. Ed Ehlinger said. “The tobacco industry is constantly evolving, and we need to keep up our work to prevent young Minnesotans from becoming addicted to new and novel flavored products.”

Senate OKs tax conformity

Minnesotans can expect an easier tax season, and perhaps giving the state a bit less.

Senators voted 63-0 Thursday for a bill that conforms state taxes to those the federal government charges. That means taxpayers will get more state deductions that match those Washington grants.

The House already passed the bill, so it awaits an expected signature from Gov. Mark Dayton to become law.

While the thrust of the bill is to make life easier for taxpayers, it also could result in up to $20 million more tax breaks for Minnesotans.

“Minnesota taxpayers will have an easier time filing taxes…” Senate Tax Chairman Rod Skoe, D-Clearbrook, said. “It is a good government thing to do.”

Disaster relief advances

Minnesota senators voted without opposition to send $17 million for flood recovery to 47 Minnesota counties and three American Indian reservations.

Much of the money in the bill that passed 65-0 comes from money appropriated but not needed for previous disasters. It includes $2.2 million general tax receipts.

The House also is expected to pass the legislation soon and Gov. Mark Dayton likely will sign it into law.

Money will pay for government expenses spent to fight and recover from floods in June 2014.

For most counties and tribes, the federal government paid 75 percent of the expenses, with the state money covering the remaining 25 percent. However, Morrison, Washington and Dakota counties did not qualify for federal assistance, so the state is paying for more of their expenses.

Higher taxes? Take a guess


This is one of a series of stories previewing the 2015 Minnesota Legislature. It concentrates on Republicans’ policy initiatives as they will retake control of the House. The Senate and governor’s office remain in Democratic control.

Let’s face it: What most Minnesotans want to know about the upcoming legislative session is whether lawmakers will raise their taxes.

The answer is a resounding maybe.

In most years, Republicans could be expected to reject any tax increase proposal. But some in the GOP, including a leader or two, say there could be tax increases for priority items such as nursing homes and transportation. Democrats in general are much more open to raising taxes to fund new or expanded programs.

“I don’t think this is the time of year you rule out taxes,” Rep. Paul Torkelson, R-Hanska, said. “This is the time you throw all the spaghetti against the wall and see what sticks.”

House speaker-designate Kurt Daudt, R-Crown, has left the door open, if only slightly, for new tax revenues. Others, however, have securely locked that door.

“Absolutely no new taxes,” Rep. Bud Nornes, R-Fergus Falls, said.

All of that talk comes at a time when Democratic Gov. Mark Dayton and legislative leaders say no general tax increase is needed in 2015.

Nornes promotes the type of revenue increases generally favored by Republicans: Find ways businesses can make more money, allowing the companies to pay more taxes, along with employees who are earning higher wages.

“If we can increase tax revenue without increasing taxes, by just increasing productivity and the economy, that would be the hope that we all have,” Nornes said. “It is kind of a pretty delicate procedure.”

Daudt agreed with Nornes that improving the economy can help. Putting more money in Minnesotans’ pockets, he said, “solves Minnesota’s problems.”

Nornes added: “We have raised so many taxes in the last two years that I think people are fed up.”

Republicans campaigned before the November election against the $2 billion tax increase approved by Dayton and his Democratic legislative colleagues when the DFL controlled the Legislature and governor’s office the past two years.

Some Republicans could consider a tax increase as a top priority. For Rep. Paul Anderson, R-Starbuck, that exception would be nursing homes.

“At least on the nursing homes, I would support some kind of an increase of some form of tax or revenue increase,” Anderson said. “I think it is that serious out here in rural Minnesota.”

Republicans are talking less this year about tax reductions than in the past, but farm property taxes may be an exception.

Rep. Steve Drazkowski of Mazeppa plans to offer a plan that would remove farm property taxes for new school and local government buildings.

Drazkowski said that he will talk to members of the Property Tax and Local Government Finance Division that he leads before coming out with a final plan. The beginnings of the plan were hatched when he talked to some southern Minnesota farmers who said they paid $55 an acre for local government building projects.

“That’s a lot of money when you begin to add up the cost of those property taxes,” he said, adding that the building taxes were not the only items farmers pay.

During his re-election campaign, Dayton said that he leaned against providing special relief for farmers. He said that to so would force other property owners to pay more; to make that change, he said, would take a reform of the entire property tax system.

Drazkowski promised that his committee will hold listening sessions about his and other property tax plans, perhaps including some away from St. Paul.

His committee also will govern state aids paid to local governments, and if he has his way things will change.

Local Government Aid, a program for cities, mostly goes to Minneapolis, St. Paul and greater Minnesota cities. For the most part, suburbs get little if any LGA.

Drazkowski and other Republicans say the program, set up to help cities with little property that can be taxed, should return to its original concept, to pay for fundamental services such as public safety. He said cities like St. Paul and Minneapolis have plenty of property to tax, so do not need LGA.

“Why are we giving Minneapolis $76 million Local Government Aid,” the chairman-to-be asked. “I don’t know.”

While Drazkowski may want to eliminate some cities from the LGA list, and make other changes, he also realizes that the Republican-controlled House cannot dictate such things. “We also have to remember we have got a Democratic Senate and a Democratic governor.”

Minnesota farmland taxes expected to rise

By Don Davis

Many Minnesota property owners could see some tax relief this year, but farmers can expect higher taxes for at least the next two years.

“What I am hearing is it is making it much more difficult to do business as a farmer,” Rep. Paul Marquart, D-Dilworth, said of agriculture property tax increases.

Still, he said, the Democratic-controlled Legislature and governor’s office have slowed increases that have occurred for more than a decade.

A new, nonpartisan Minnesota House report shows that property taxes as a whole should fall $49 million this year, a 0.6 percent drop, although the cost for each property owner will be different. The tax cut may not be seen on property tax bills because the House figures in tax refunds that Democrats increased.

In 2015, property taxes should go up $238 million, a 2.8 percent increase, the House report predicted.

In both years, farmland property taxes are expected to rise: 8.1 percent this year and 4.7 percent next year.

Researchers emphasize that they are working off their best guess because they cannot predict factors such as how much local governments may raise property taxes and how much property may be worth.

The two major parties waged a news release battle soon after the property tax figures were released. Democrats emphasized this year’s predicted drop in most types of property taxes, while Republicans focused on the 2015 increases.

“We knew farmers and rural landowners were going to be hit hard with property tax increases, but now it appears that homeowners in all tax brackets can expect to pay more despite promises the Democrats made over the past two years,” said Rep. Paul Torkelson, R-Hanska. “Make no mistake, hardworking Minnesotans from all corners of the state are going to feel the impacts of this property tax increase.”

A news release from Democratic-Farmer-Labor Party lawmakers showed a different side, explaining that when Republicans were in charge, property taxes soared $370 million in 2012.

“The DFL-led Legislature made property tax relief a priority in our budget and, in particular, made direct property tax relief a priority,” the DFL reported, adding that Democrats approved $178 million in property tax relief in the past two years and more than 300,000 homeowners should receive larger property tax refunds.

Marquart, long an outspoken supporter of lowering farm taxes, said that at least agriculture taxes are not rising as fast as they would have under the policies in effect when Democrats took over in early 2013.

The rising taxes still bother him: “I don’t like that, but I think we are getting ag property taxes under control.”

Marquart said the main reason farm property taxes are going up is that farmland value is rising. While home values recently have gone up 6.8 percent, ag land is up 13.3 percent, he said. That shifts property taxes from homes to farmland.

Farmers complain that while land prices are rising, they do not benefit unless they sell their farms.

Marquart said farmers in his western Minnesota district report taxes that not long ago were $14 to $15 an acre now are $30 to $40. “It really has impacted the cost of production.”

Marquart said he does not have the answer to how to fix ag taxes, but said the Legislature and governor must tackle the issue next year.

“We still have a lot of work to do, absolutely,” Marquart said. “But we are moving in the right direction.”

Construction spending up, taxes down slightly

Senate in session Friday

By Don Davis

Public construction projects across the state will receive more than $1 billion while some Minnesotans’ property taxes will fall slightly after legislators wrapped up two key bills Friday.

When Gov. Mark Dayton signs the measure, which is expected soon, public works projects will receive $857 million obtained by the state selling bonds, with another $199 million coming from a state budget surplus. The Capitol building is the biggest single project, getting $126 million to finish a multi-year renovation project.

Higher education construction spending, divided among the University of Minnesota and Minnesota State Colleges and Universities campuses, totals $240 million

While public construction spending is significant, tax cuts are in the cards this year after Democrats in control the Legislature and governor’s office increased them about $2 billion a year ago.

As this year’s legislative session wound down Friday, lawmakers lowered property taxes $103 million, making the year’s total tax cut $556 million in two tax bills.

Just one lawmaker voted against the Friday tax bill, which features an average $410 tax relief for Minnesotans who live on their farms.

Homeowners will see a one-time increase in homestead credit refunds of 3 percent, an average of $837 per home. Renters’ credit refunds will go up 6 percent, an average of $643.

Friday’s tax bill also:

– Provides $4.5 million this year and $10 million a year in the future for 83 counties to manage aquatic invasive species prevention programs.

– Gives 14 rural counties a $500 per-person payment to recruit and retain volunteer first responders, such as firefighters.

– Allows National Guard members’ military pay to be treated like active-duty personnel, lowering their taxes.

– Gives $4.5 million in tax breaks that five cities near North Dakota and South Dakota can give businesses and apartment properties.

– Requires study on the Minnesota impact of the North Dakota oil boom.

Local Government Aid for cities will go up $10 million after lawmakers boosted it $80 million last year. County Program Aid the state increased last year helped most counties, but 11 rural ones ended up losing money; Friday’s bill provides one-time payments to those counties.

Sen. David Osmek, R-Mound, said last year’s attempt to lower property taxes by giving local governments more state money did not work because property taxes rose.

“I think we need to be very careful,” Osmek said. “Giving local government more money doesn’t equate to tax decreases, it just equates to more spending.”

The bonding bill passed the House and Senate easily, but there were complaints.

Sen. Roger Chamberlain, R-Lino Lakes, said the bill contains plenty of money for Minneapolis and St. Paul, but not enough for the rest of the state. For instance, he said, dams across the state are falling apart and state aid is needed to fix them.

He also complained that the bill lacks enough money for local roads and bridges.

The bonding bill contains funds to build University of Minnesota Twin Cities laboratories to study bees and aquatic invasive species.


Some figures from public works funding bills Minnesota legislators passed Friday:

– Capitol building renovation. $126 million

– University of Minnesota and Minnesota State Colleges and Universities asset preservation and replacement. $43 million each

– University of Minnesota Tate laboratory renovation, Minneapolis. $57 million

– Red Lake school construction. $6 million

– Flood prevention programs. $12 million

– Vermillion State Park development. $14 million

– State trail acquisition and development. $17.7 million

– Local bridge replacement. $33 million

– Local road improvements. $54 million

– Minnesota State Security Hospital, St. Peter, remodel. $56 million

– Minnesota Sex Offender Program, St. Peter, remodel. $7 million

– Corrections Department improvements. $18 million

– Housing aid. $100 million

Legislators work toward adjournment

Having a laugh

By Don Davis

Minnesota representatives approved a pair of public works funding bills spending more than $1 billion early today as lawmakers head toward what they hope is adjournment for the year later today.

The Senate is scheduled to take up the public works bills later this morning.

Other major bills left on the legislative agenda for today include medical marijuana, taxes, budget adjustments and a measure to limit online games presented by the state lottery.

Senators planned to be to work at 9 a.m., with the House coming in at 11 a.m.

Leaders of the Democratic-controlled Legislature were ready to crow that they adjourned early this year, even though it was not by much. The state Constitution makes Sunday the last day they could pass bills and orders them to go home Monday.

The most high-profile issue awaiting debate today is allowing Minnesotans with severe medical conditions to use marijuana extracts. People allowed to use the chemicals would include children with seizures, cancer patients with complications and multiple sclerosis patients.

Versions of the bill to be considered today already passed the House and Senate by overwhelming margins.

“We will take it up after we get the major work done,” Senate Majority Leader Tom Bakk, D-Cook, said.

While the marijuana bill could affect 5,000 Minnesotans with serious medical conditions, part of another bill due for consideration today would affect thousands more.

Legislative budget negotiators early today added a pipeline safety provision Gov. Mark Dayton insisted be included.

The budget bill already contained more than $8 million to improve the safety of trains hauling crude oil, with help for first responders such as fire departments to afford training and new equipment. The addition does the same things for pipelines, which are moving increasingly large amounts of oil and other hazardous products.

Trains and pipelines are being used to move crude oil from western North Dakota, where oil wells are pumping record amounts.

Pipelines will be assessed, as are railroads, to raise money to fund first responder needs.

House Transportation Finance Chairman Frank Hornstein said pipelines have spilled 18,000 gallons of hazardous materials since the early 1990s, and safety needs to be increased on them as it needs to be on railroads.

Crude oil train derailments have gained lots of publicity in the past year and took the spotlight as legislative committees discussed oil transportation safety. Trucks hauling crude oil got little attention in the Legislature, but Hornstein said they will be to be addressed in future years.

The public works funding bills, partially paid by the state selling bonds and partially with cash from a budget surplus, spends the most for a single project on renovating the state Capitol building: $126 million.

Higher education spending, divided among the University of Minnesota and Minnesota State Colleges and Universities campuses, totals $240 million.

The most-discussed issue in the bonding bill required two bills to settle it.

Southwest Minnesota’s Lewis and Clark water system was left out of an earlier House bonding bill, but Republicans, in particular, demanded it be funded.

The solution was to pay $22 million in budget surplus cash from the public works bills, with another $45 million coming in a tax bill due up later today.

The plan would allow local officials to sell bonds to fund $45 million of project costs. Local governments would repay a third of the bonds over 20 years, with the state paying the other two-thirds, Senate Taxes Chairman Rod Skoe, D-Clearbrook, said.

“We are stepping up,” said House Taxes Chairwoman Ann Lenczewski, D-Bloomington. “The state is going to pay 85 percent of the whole thing.”

Minnesota is getting involved because the federal government backed off a promise to pay for the system, which is to bring water from near the Missouri River in South Dakota. Federal funds dried up when the project reached the Minnesota-South Dakota line.

“The federal government really has dropped the ball here,” said Rep. Paul Torkelson, R-Hanska, adding that lack of water is hampering economic growth throughout southwestern Minnesota.

Some projects including in the public works funding bills:

— Capitol building renovation. $126 million

— University of Minnesota and Minnesota State Colleges and Universities asset preservation and replacement. $43 million each

— University of Minnesota Tate laboratory renovation, Minneapolis. $57 million

— Red Lake school construction. $6 million

— Flood prevention programs. $12 million borrowed

— Vermillion State Park development. $14 million

— State trail acquisition and development. $17.7 million

— Local bridge replacement. $33 million

— Local road improvements: $54 million

— Minnesota State Security Hospital, St. Peter, remodel. $56.3 million

— Minnesota Sex Offender Program, St. Peter, remodel. $7.4 million

— Corrections Department improvements. $18 million

The bonding bill also contains funds to build University of Minnesota Twin Cities laboratories to study bees and aquatic invasive species.

Representatives began debating the public works bills at 2:15 a.m., nearly seven hours after legislative leaders had agreed to its provisions. Lawmakers waited must of that time while negotiations with the governor went on. Public works debate lasted less than an hour.

Negotiators agree to new type of ‘Jesse checks’

Eken visits

By Don Davis

Farmers, homeowners, renters and businesses would share $103 million in a second round of Minnesota tax cuts after negotiators worked out a compromise that is expected to pass the Legislature next week.

Lawmakers from both parties hailed the agreement Thursday, saying that it is good to send part of the state budget surplus back to Minnesotans.

One tax negotiator compared the deal to checks Minnesotans received when Gov. Jesse Ventura was in office.

“The House (property tax break) provisions were what appeared to be ‘Jesse checks’ before an election,” Sen. Paul Gazelka, R-Brainerd, said.

Many farmers would receive an average $200 property tax break under the measure that is a blend of tax bills the House and Senate passed. The compromise bill would send $17 million to more than 90,000 farmers, mostly those who live on their farms.

Gov. Mark Dayton told reporters Thursday that rural lawmakers tell him farmers are seeing ever-increasing property taxes.

“I think that it is appropriate to give them some relief now,” the governor said.

“Farmers are going to get a new tax refund that doesn’t now exist,” House Tax Chairwoman Ann Lenczewski, D-Bloomington, said.

While the farm tax cut is permanent, renters and homeowners would get one-time increases in existing programs.

About 500,000 homeowners would receive 3 percent larger homestead credit refunds while those receiving renters’ credit refunds would see 6 percent bigger checks.

“You can view this as supplemental relief to what we did last year,” Senate Tax Chairman Rod Skoe, D-Clearbrook, said.

Negotiations on the tax bill are complete, but it will not be finalized until Monday to allow last-minute changes as the 2014 Legislature nears its adjournment.

When combined with an earlier tax-cut bill, there would be $550 million in tax cuts.

Dayton said that he will sign the bill once it passes and legislative Republicans and Democrats express their support.

“The best way we can spend the (state budget) surplus here in Minnesota is to send it back to Minnesotans…” House Minority Leader Kurt Daudt, R-Crown, said. “We know tax cuts are popular, even among Democrats, in an election year.”

While called a tax bill, Skoe said that it also helps the state economy.

“It takes more than just cutting taxes to grow our economy, and that’s why our tax relief package also invests in new workforce housing, protecting our lakes and streams from aquatic invasive species and new efficiencies for state and local governments,” Skoe said.

The bill provides $4.5 million this year and $10 million per year after that for 83 of Minnesota’s 87 counties with public-access boat landings. The money is to be used by the county to help with efforts to fight plant and aquatic invasive species.

Invasive species are forcing out native species, which many in the tourism industry say threatens their businesses.

“It is a really, really important provision for much of the state,” Skoe said.

The tax bill also:

– Increases Local Government Aid to cities by $10 million to keep up with inflation.

– Allows 14 counties to take part in a pilot project to attract and retain volunteer first-responders by providing a $500 stipend.

– Provides military personnel some tax advantages.

– Gives parents and guardians of students struggling to learn to read tax credits of up to $2,000.

– Begin to eliminate a requirement that businesses pay some of the June sales tax they collect earlier than normal.

Minnesota Legislature’s end is near

By Don Davis

The Minnesota House takes up medical marijuana today in what could be a debate lasting well into the night while pieces fall into place on tax and spending bills as the Minnesota Legislature nears the end of its 2014 session.

Debate on the much-discussed proposal to allow children with seizures and adults with extreme pain to use marijuana extracts is expected to begin in the early afternoon, and could last hours. Senators overwhelmingly approved a more liberal bill earlier in the week, but it may go too far for Gov. Mark Dayton to sign it into law.

On Thursday, Dayton would not commit to backing a more restrictive marijuana bill by Rep. Carly Melin, D-Hibbing, that only allows one medical marijuana manufacturer, instead of 55 in the Senate-passed bill. Allowing 55 centers around the state “seems to be quite unworkable,” said Dayton, who has required medical and law enforcement support before signing off on any marijuana plan.

The Democratic governor said that Health Department staffers have been working the last several days to make sure any medical marijuana bill that passes is workable.

“Legislators’ hearts are in a good place,” he said. “They want to do something, but it has to be functional.”

If the House passes Melin’s bill today, House and Senate negotiators will take up the complex task of merging the two different bills into a compromise proposal. And it must be done in just a few days.

The state Constitution requires the Legislature to adjourn no later than May 19. While some legislative leaders had predicted a pre-Easter adjournment, the final day now looks to be no earlier than mid-week next week.

“The sooner we are done the better,” Rep. Pat Garofalo, R-Farmington, said. “I would really like to get done this week. … No one is safe until the Legislature adjourns.”

Formal and informal negotiations continue on several unresolved issues. Prime among them are how to spend a budget increase and what public works projects get state money.

Legislative leaders sent four key lawmakers into a room Thursday to negotiate a public works bill, to be funded by the state selling bonds. The hope is that the four can work out the bonding bill so it is acceptable to the House and Senate, thus avoiding after-the-fact negotiations.

“It’s good to see cooperation and coordination, even beforehand,” Sen. Kent Eken, D-Twin Valley, said.

House Speaker Paul Thissen, D-Minneapolis, said leaders did not give orders to the four bonding negotiators about specifics that must be included in the bill. However, House Minority Leader Kurt Daudt, R-Crown, said there is an understanding that all four legislative leaders expect funding for the hot-button bonding issue: southwestern Minnesota’s Lewis and Clark water project.

The project, to bring water in from South Dakota, has produced by far the most bonding discussion.

Daudt said he hopes Lewis and Clark can get the $20 million needed to bring water to Luverne and a like about to fund the next phase. However, money may not be approved for the third phase, to extend the pipeline to Worthington, the minority leader said.

Rep. Rod Hamilton, R-Mountain Lake, said he is pushing for the entire $69 million Lewis and Clark funding.

While debate continues on how to spend money, a tax bill has been negotiated. It features an average $200 property tax break for farmers, as well as cuts for renters and homeowners.

Senate passes second tax bill, different from House measure

By Don Davis

The Minnesota Senate on Thursday approved a second tax-cut bill that pretty much matches the total dollar number of tax breaks representatives approved earlier, but the two chambers go different routes to get there.

Senators voted 57-6 for their $100 million tax-break measure, which spreads the money around to a wide variety of taxes. The House already voted 125-0 for a bill focusing on cutting property taxes.

House and Senate negotiators will work on producing a compromise bill after lawmakers return from an Easter-Passover recess April 22.

Sen. Rod Skoe, D-Clearbrook, said much of his tax bill deals with relatively narrow provisions for specific communities and removing outdated laws.

Among the broader provisions is one to give active military personnel and veterans larger tax breaks.

Sen. Roger Reinert, D-Duluth, sponsored the military credit, which would increase a tax break from $120 to $200 a month for each month a person was in active military service in specific areas after Dec. 31, 2013.

Also, the annual credit for past military service would be doubled, from $750 to $1,500, and phase out beginning with income greater than $30,000.

Sen. Tom Bakk, D-Cook, has a provision in the bill to give the Revenue Department authority to negotiate an income tax reciprocity deal with Wisconsin.

Then-Gov. Tim Pawlenty canceled the agreement after Wisconsin fell $17 million behind.

Reciprocity allows taxpayers who live in one state and work in the other to pay income taxes to just one state. Since more Wisconsin residents work in Minnesota than the other way around, Wisconsin always owed Minnesota money at the end of the year. But the Badger State fell behind in its payments.

“We would like to have an agreement with Wisconsin so these people only have to file one state income tax,” Skoe said.

If the agreement is reached by the end of this year, it may include up to a $1 million loss to Minnesota, an incentive for Wisconsin to settle. If it comes after that, Minnesota will not accept a loss.

Provisions in the bill include new and expanded income tax credits for transit users, parents paying for tutoring or reading assistance, greater Minnesota businesses hiring interns, and foreclosed and short-sale homeowners. Other tax relief would go to snowmobile clubs, postseason high school events tickets and nonprofit fundraising groups.

Skoe said fire departments struggle to get volunteers, and tax credits could help them and other volunteer public safety agencies recruit more people. Each of about 19,000 volunteer public safety workers could get the $450 income tax credit.

Also in the bill is a provision to split $10 million among 83 of the state’s 87 counties to fight aquatic invasive species.

Minnesota taxpayers may file

Minnesota officials say they are ready to accept tax returns again and software companies have updated their products to take into account newly approved state tax breaks.

Revenue Commissioner Myron Frans and Gov. Mark Dayton this morning said work is completed after lawmakers late last month provided tax breaks that will give thousands of Minnesotans lower income tax bills.

The Revenue Department reports that all software companies have been provided updates, but taxpayers using desktop software should update their programs before filing returns. Tax preparers are being told to file returns that have been stacking up while their systems were updated.

Frans said a million taxpayers still need to file. The deadline remains April 15 even though several new tax cuts are available.

For the 1.5 million who have filed, he said that no action is needed. At some point after April 15, the Revenue Department will review all returns to determine if taxpayers are eligible for any of the new tax breaks. The state eventually will notify taxpayers if they are to receive larger refunds.

Ten new tax breaks were provided in the bill signed last month. They range from larger working family credits for families earning up to $40,000 a year to new mortgage insurance premium deductions to higher deductions for teachers who buy their own supplies.

Capitol notebook: 60,400 open jobs

Jobs are available in Minnesota.

The Minnesota Department of Employment and Economic Development reported Tuesday that state employers had 60,400 vacancies in the fourth quarter of 2013. That is the most openings in the fourth quarter for nine years.

Job vacancies were 2.6 percent higher than the same period in 2012. Still, there were 2.1 jobless Minnesotans for every open job.

“While there are still hardworking Minnesotans looking for employment, our data suggest the labor market is coming back into alignment in the wake of the recession,” DEED Commissioner Katie Clark Sieben said. “Increased job vacancies are a sign that the economy is growing and companies are looking for skilled workers.”

According to the study, 45 percent of openings were in greater Minnesota. Compared with a year earlier, job vacancies were up 11.3 percent in greater Minnesota and down 3.6 percent in the Twin Cities.

Health care and social assistance had the most job vacancies, followed by retail trade.

Businesses with 10 to 249 employees accounted for 64.5 percent of the vacancies.

Election judges wanted

The Minnesota secretary of state’s office Tuesday issued a plea for election judges.

About 30,000 Minnesotans are needed to serve at the Aug. 12 primary vote and the Nov. 4 general election.

Judges register voters, provide ballots, oversee ballot-counting machines and compile precinct voter statistics at the end of Election Day.

People interested in being judges may learn more at

Poll workers are guaranteed pay and granted time off from work by state law.

New Minnesota tax forms readied

The Minnesota Revenue Department has provided tax software companies all of the changes in tax forms and instructions following state law changes so software may be updated Thursday.

Also, state officials notified Minnesota libraries to destroy all paper income tax forms and instructions they have. New forms soon will be available on the Revenue Department website,

The changes come after the Legislature and Gov. Mark Dayton approved $443 million in tax cuts, some of which apply to people now filing income tax returns.

Revenue Department officials say they continue to recommend that Minnesotans, and their tax preparers, not file taxes yet if they qualify for any of the new tax breaks (specifics are available at the department website). Tax preparers should wait until the department gives them the go-ahead to file, the department says. Those filing electronically can send in returns once their software is updated.

More than 56 percent of Minnesotans have filed returns, with 92 percent filed electronically.

House set to debate second tax bill

The second House tax bill is ready for the full House to debate, probably on Friday.

After legislators cut taxes $443 million a couple of weeks ago, the House Ways and Means Committee on Tuesday approved $103 million more in cuts. They include breaks for homeowners, farmers, renters and businesses.

The new breaks focus on property taxes.

The Senate likely will debate the tax bill next week.

The House is expected Thursday to take up a bill making changes in the $39 billion, two-year budget lawmakers passed last year. Senators could look at a similar bill as early as Friday.

Senators had planned to meet Saturday, but leaders announced Tuesday that will not happen.

On Thursday, senators plan to debate a bill written to reduce school bullying.