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.

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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 mnvotes.org.

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, www.revenue.state.mn.us.

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.

Political notebook: Medical marijuana keeps producing controversy

By Don Davis

Medical marijuana is a story that is not going away.

A bill to legalize the plant to help people with extreme pain and children with seizures stalled, and Gov. Mark Dayton said he could not sign a medical marijuana bill if it did not have the support of law enforcement and medical organizations. They generally do not back the bill.

With most bills, all of that would have killed the measure. Not with this one.

Parents of children who suffer seizures gathered reporters for an emotional Wednesday news conference. With tears, they complained that Dayton is delaying help for their kids.

Jessica Hauser of Woodbury told reporters that Dayton suggested she buy marijuana illegally in Minnesota or go to another state. On Friday, Dayton gave “no” as his answer to a question about whether he told her to buy marijuana illegally.

“I’ve said all I’m going to say about medical marijuana,” Dayton added. “You had statements. You asked questions. … I’m just not going to discuss it further.”

He then talked about it some more.

Other drugs go through exhaustive testing before the public can access them, Dayton said. Since he must govern for all Minnesotans, he said, he wants the chemical from marijuana that may help control seizures to undergo the same test.

In a lengthy conference call with reporters earlier in the month, and something he repeated Friday, the governor said he “is told” that marijuana is available on the street in every Minnesota city.

While he has said he does not advocate breaking the law, he also has said he understands a parent’s desire to do anything possible to ease a child’s illness.

Another tax bill ready

Getting through one tax bill was taxing, and now the Minnesota House is ready to consider a second one.

“Our second tax bill will focus on ways to make further reductions in property taxes for homeowners, renters and farmers,” said House Tax Chairwoman Ann Lenczewski, D-Bloomington. “We believe this is a responsible way to continue expanding our economy from the middle out while maintaining our stable budget into the future.”

The first tax-cut bill was enacted a little more than a week ago, reducing income taxes for many Minnesotans as well as eliminating some sales taxes businesses pay.

The new House bill would reduce taxes $45 million.

Both tax-cut bills come after the Democratic-controlled Legislature and governor last year approved more than $2 billion in tax increases.

Democrats are focusing on property tax relief in the phase 2 bill. They have campaigned for years on property tax increases they blamed on Republican Gov. Tim Pawlenty and GOP lawmakers.

The biggest single property tax relief provision would be $18 million to homesteaded farms. More than 90,000 farmers would be affected, with the average getting $460 lower tax bills.

About 500,000 other homeowners would receive $12.1 million in cuts, with renters getting $12.5 million in a 6 percent refund increase.

The full House is to vote on the measure in the next few days.

It’s a rushed session

All Minnesota politicians, and those who follow them, probably can agree on one thing: This year’s session is moving faster than any other.

“This session has been a mad rush to everything,” Gov. Mark Dayton said. “I’ve never seen anything like this.”

He recalled the days, not that long ago, when the even-year session (also known as the election-year session) was reserved for approving a list of public works projects and fixing any urgent issues, such as dealing with economic changes.

That concept has changed dramatically, with pretty much any subject fine for debate.

“More is never enough,” Dayton said about politicians’ mentality.

The session, just over a month old, gets into some of its basic issues in the next week. House Speaker Paul Thissen, D-Minneapolis, said a bill making tweaks in last year’s $39 billion, two-year budget, will be up for a vote near the end of the week. So will a tax-cut measure.

The rush has brought up some tension among lawmakers, prompting Chairman Tom Huntley, D-Duluth, of the House health and human services finance committee to remark near the end of one long meeting: “I think we are so tired that we can’t get mad at each other any more.”

The great space debate

Minnesota politicians have delighted in arguing about space, specifically space in the Capitol and a proposed Senate office building.

All six Republican governor candidates, and most others in the GOP, have come out against the proposed $63 million building and a nearby $27 million parking garage. The House in general has been skeptical of the need for something on that scale.

Senate Democratic leaders, however, say that so many other agencies are growing during a Capitol renovation that they do not have enough space left for senators and their staffs.

The Senate space would drop from today’s 86,372 square feet to 48,025. At the same time, the governor’s office space would soar from 9,055 to 16,630, which Gov. Mark Dayton says is to give the lieutenant governor and staff space.

Historical society space would double, journalists would get more room and so would the Supreme Court. Public space, including for dining and exhibits, would grow.

Senate Majority Leader Tom Bakk, D-Cook, said the Capitol building renovation is a good time to build a new facility because it would save the state from paying for temporary space to house senators and their staff for a year or two when their Capitol offices will be closed.

The decision about whether the new building is constructed rests on the House rules committee, which is looking into space needs and is expected to take a vote in April.

Update: Tax officials suggest many taxpayers wait until April 3 to file

By Don Davis

Minnesotans entitled to share in $49 million of new individual income tax breaks should wait a week and a half to file tax returns, state revenue officials say.

“It will allow them to get their refunds quicker,” Assistant Revenue Commissioner Terri Steenblock said Monday.

If taxpayers who qualify for one of 10 new breaks file returns now, Revenue Commissioner Myron Frans added, it could be months before they get their refunds. If they wait to file until April 3, tax officials expect software and tax preparers to be ready to handle law changes state legislators and Gov. Mark Dayton approved Friday.

April 15 remains the income tax deadline.

On Friday, Frans urged people to wait until Monday to file returns if they might qualify for new tax breaks. On Monday, he and Steenblock said that waiting for everything to be ready is in the best interest of taxpayers and their department.

Steenblock said that even if taxpayers wait until April 3 to file, “we cannot guarantee every software vendor will be able to update their software.”

After April 3, she said, taxpayers filing returns electronically via software that does not include updates from the new law will be notified quickly that their returns were rejected. Returns will not be rejected if filed before April 3, but any refunds due taxpayers could be delayed for months.

Frans said he hopes to have a better idea Thursday about how long his department will need to finish the work reviewing tax returns for missed breaks.

In many cases, Revenue Department employees hope to make changes themselves and increase refunds for those who qualify, without taxpayers taking any further action. In other cases, the department will notify taxpayers they must file an amended return to take advantage of the law.

“This is a very complex task we are undertaking,” Steenblock said.

Steenblock said the Revenue Department is working to change tax forms and instructions and briefing software venders on the changes. Next, she said, internal department processes will be updated, eventually followed by the department reviewing returns already filed to see if taxpayers may qualify for the new tax cuts.

The tax bill lawmakers passed and Dayton signed on Friday set aside $1 million for the department to undertake the job.

While tax cuts overall amounted to $443 million, just $49 million of them affect individual income tax returns being filed now.

“About 1 in 10 taxpayers probably will be able to benefit,” Frans said, meaning that up to 275,000 people will split the $49 million in new tax breaks.

Taxpayers who do not qualify for the new tax breaks can go ahead and file returns now.

Frans said that he expects Minnesotans to have a lot of questions, so his department is increasing the number of operators at its call center: (651) 296-3781 and (800) 652-9094.

Minnesotans will benefit from two tax changes when filing returns next year, Frans said.

A working family credit for people earning up to $40,000 a year was expanded a bit this year, but Frans said that it expands much more next year.

Also, he said, about half of Minnesota taxpayers will benefit next year from a change in how the state treats married couples. The change comes when the state conforms to federal law that gives married couples a tax break.

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New Minnesota tax breaks
Minnesotans may take advantage of 10 newly enacted tax breaks. All are designed to more closely match state tax law with federal law, which results in taxpayer savings.
– Working family credit: New law moves the credit closer to the federal earned income tax credit for families earning $25,000 to $40,000 annually.
– Mortgage insurance deduction: Minnesotans making less than $110,000 a year may deduct mortgage insurance premiums.
– Mortgage debt forgiveness exclusion: Homeowners whose mortgage lenders agreed to accept less than they owed on their homes may exclude the amount of debt the lender forgave.
– Educator expenses deduction: Kindergarten through 12th grade school employees who buy classroom supplies with their own money may deduct up to $250 of the purchases.
– Higher education tuition deduction: Those who paid tuition and fees to a post-secondary school may be able to deduct up to $4,000 if income is below $80,000 for individual returns or $155,000 for joint returns.
– Student loan interest deduction: Students may be able to deduct up to $2,500 of student loan interest if returns show incomes below $75,000 for individual returns or $155,000 for joint returns.
– Education savings account exclusion: Taxpayers with a child in grades K-12 who used distributions from a Coverdell Education Savings Account may exclude those payments from income.
– National Health Corps scholarship exclusion: Taxpayers who received a National Health Service Corps scholarship or Armed Forces Health Professions scholarship and financial aid may be able to exclude those payments from income.
– Employer-provided education, adoption and transit assistance exclusion: Those whose employers provide education, adoption and transit assistance may be able to exclude some of those benefits from income.
– Tax-free individual retirement account exclusion: Taxpayers 70.5 years old and older who donate to charities from their IRAs may exclude up to $100,000 from income.
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More information is available at www.revenue.state.mn.us. Click on orange “tax law changes” button to reach a page with several fact sheets.

 

Qualify for new tax breaks? Wait to file

Frans

By Don Davis
Minnesota revenue officials will not be ready to pay Minnesotans for newly enacted tax breaks until April 3.

Revenue Commissioner Myron Frans today advised Minnesotans who may qualify for one of 10 new individual income tax breaks not to file income tax returns until then. He said that is when tax preparers, software companies and his Revenue Department should be ready.

Taxpayers who do not qualify for the new tax breaks can go ahead and file returns, he added.

“About 1 in 10 taxpayers probably will be able to benefit,” he said, meaning that up to 275,000 people will split the $49 million in new tax breaks.

Minnesotans who already have filed their returns and qualify for one of the new breaks do not need to do anything, Frans said. The Revenue Department will contact them and let them know about their new, and bigger, refunds and whether they need to file an amended return.

However, Frans said, the department does not know how soon employees will be able to comb through returns to find those who are owed bigger refunds.

In many cases, Revenue Department employees hope to make changes themselves and increase refunds. In other cases, the department will notify taxpayers they must file an amended return to take advantage of the law.

“This is a very complex task we are undertaking,” Assistant Revenue Commissioner Terri Steenblock said.

The tax bill lawmakers passed and Gov. Mark Dayton signed Friday set aside $1 million for the department to undertake the job.

Tax returns must be filed by April 15.

New and newly expanded state income tax cuts are:
– Working Family Credit.
– Mortgage insurance deduction.
– Mortgage debt forgiveness.
– Educator expenses deduction.
– Higher education tuition deduction.
– Student loan interest deduction.
– Education savings account exclusion.
– National Health Corps scholarship exclusion.
– Employer-provides education, adoption and transit assistance exclusion.
– Tax-free individual retirement account exclusion.

State advice: Don’t file income tax returns this weekend

Bakk, Dayton

By Don Davis

Minnesotans who have not filed their state income tax returns should wait until next week.

State Revenue Commissioner Myron Frans said that will give tax officials time to provide more specific advice about how a tax-cut bill legislators approved Friday will affect taxpayers. He said Minnesotans who already have filed returns, about half of taxpayers, will be notified if their taxes fall because of the newly minted law.

“If you have not filed your tax return yet, I would advise you to wait until Monday,” he said.

People who have yet to file may want to learn what tax breaks could affect them, Frans said, but warned: “Regardless of the little delay, they have to meet the April 15 deadline.”

He said some returns can be modified by the department with no further action by taxpayers. In other situations, Frans’ department will notify taxpayers who need to file an amended return to take advantage of the tax breaks.

Frans plans to announce more specifics Monday, but on Friday said that taxpayers especially may want to delay filing returns if they may have deductions or credits related to mortgage insurance and education. Up to 16,000 more families who earn up to $45,000 a year also may qualify for an expanded Working Family Credit.

During the weekend, Frans’ department will make adjustments to account for the changes. The Revenue Department also will work with tax preparers and tax software companies to help them make needed changes that they hope will be incorporated by April 1.

The scramble is needed because Minnesota legislators approved $443 million of tax cuts Friday, 10 months after they raised taxes more than $2 billion and less than a month before the tax deadline. Many of the tax breaks, which could affect up to 500,000 Minnesotans, can lower taxes on returns now being filed.

Senators approved the bill 58-5, with the House following 126-2.

Sen. Patricia Torres Ray, D-Minneapolis, said she voted against the bill because she favors more education spending instead of the tax cuts.

The votes came a day after Republican senators delayed debate on the bill, saying they only received the bill an hour before debate was to begin.

Even before the Thursday delay, senators waited two weeks after the House passed its tax bill.

“We took a little bit of time to look at the ramifications so we could make some improvements,” Senate Tax Chairman Rod Skoe, D-Clearbrook, said. “And we did.”

More cuts may be coming. “We are not done yet,” Skoe said, adding that he expects a second tax bill.

Skoe argued against deeper tax cuts now, and in favor of putting more in the state budget reserve, because the last time the state was in good financial condition then-Gov. Jesse Ventura led the charge to send tax rebate checks to Minnesotans. Soon after that, Skoe said, the state began running into financial problems.

The chairman’s provision adds $150 million to the state budget reserve, which Senate Majority Leader Tom Bakk, D-Cook, said is important. He said it “assures fiscal stability for the state going forward.”

The tax bill rewrites some state tax laws to conform to federal law, which would lower thousands of Minnesotans’ income taxes. That will save taxpayers more than $200 million.

Saving businesses more than $200 million are the canceling of business sales taxes approved last year as well as a warehousing tax that was to take effect April 1. The sales taxes included those placed on farm equipment and other commercial repair work and on some on technology sales,.

“I call it a good start,” said Rep. Paul Anderson, R-Starbuck, who like many Republicans wanted more taxes lowered.

Republicans frequently reminded Democrats that they increased taxes more than $2 billion last year, but only want to cut taxes $443 million this year (a figure that grew slightly Friday as last-minute changes were made to the bill).

“It is not often that we get a second chance to recover once we have jumped off the ledge,” Sen. Paul Gazelka, R-Brainerd, said, adding that many mistakes were made last year when business taxes were increased.