The Democrat-controlled Minnesota Senate voted Monday for tax cuts a fraction of the size that Republicans in the House want, sending negotiators into what could be a contentious final two weeks of the legislative session.
The Senate tax bill and a House agriculture funding bill that also passed Monday are the final parts of the two chambers’ money plans. Now, conference committees take the spotlight as differences between the chambers, in some cases massive differences, need to be worked out by May 18 to avoid a government shutdown.
No serious negotiations had begun by Monday, but several Wednesday House-Senate conference committees meetings were scheduled. No high-level talks among the governor and legislative leaders were planned.
The tax bill passed 42-25. Sens. Paul Gazelka of Nisswa, Dave Senjem of Rochester and Carla Nelson of Rochester were the only three Republicans to vote for the bill.
Senate Majority Leader Tom Bakk, D-Cook, has said the tax bill is not mandatory to pass this session, but it contains provisions his party likes, such as aid increases the state would send local governments.
Sen. Rod Skoe, D-Clearbrook, said his tax bill “sets Minnesota up for success (with) targeted tax relief.”
The Senate tax chairman said the legislation would give property tax relief to all categories other than railroads, which are slated to pay more under a Senate Democratic transportation plan.
Tax relief would come through several actions, Skoe said, including “significant commitments to partnerships” with local governments. Increased state aid to cities, counties and townships, worth $54 million, are in the bill with the idea that more state money means they could cut local property taxes.
His bill would bring Local Government Aid to cities back to what they got in 2002, a year that was followed by years of cuts or static funding.
The Senate bill also would increase tax breaks for parents of students, businesses that do research and development and provides help for investors looking to build apartments in areas with jobs but not enough housing.
Another provision would increase taxes on seasonal recreational property valued more than $300,000. Skoe said properties at that value are homes, not cabins, and should be taxed more.
The state helps homeowners whose property taxes rise more than 12 percent in a year; the bill would cut that eligible percentage to 10 percent. It also would provide state money to farmers whose property taxes rise at least 8 percent, which is not in current law.
Also in the legislation is a provision that the state would withhold aid to southwestern Minnesota cities and counties if they do not fulfill a requirement to pay their portion of Lewis and Clark water system construction funds.
Republicans criticized Skoe for presenting a tax bill with relatively few tax breaks when the state is projected to have a nearly $2 billion surplus.
When combined with a gasoline tax included in the Senate Democrats’ transportation plan, the overall DFL budget proposal “has huge tax increases, while this bill has a paltry $170 million in tax relief,” Sen. Julianne Ortman, R-Chanhassen, said. Skoe considers tax cuts to be more than $200 million.
Republicans tried and tried again to change the Senate Democratic-Farmer-Labor tax legislation more to their liking, but mostly failed.
For instance, Gazelka could not convince Democrats to go along with his proposal to eliminate state taxes on veteran pensions. And Senjem failed to win when he moved to eliminate taxes on Social Security payments.
In the House, Republicans said the centerpiece of their bill would provide a family of four $500 over two years. The Dayton administration, however, said it would be more like $130 per household.
One of the most controversial parts of the Republican measure is the elimination of Minneapolis, St. Paul and Duluth Local Government Aid payments.
“In the remaining two weeks of the session, mayors and city leaders from across greater Minnesota will work tirelessly to see that the House changes direction and recommits to meeting the needs of communities by adopting the Senate’s proposal to increase funding for LGA,” said Le Sueur Mayor Bob Broeder, Coalition of Greater Minnesota Cities vice president.