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D-Clearbrook, said much of his tax bill deals with relatively narrow provisions for specific communities and removing outdated laws.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

Senate OKs tax cut

By Don Davis

Senators took a day to read a 62-page bill that would cut taxes $432 million, then passed it this afternoon.

After senators approved the bill 58-5, the House planned to take it up later today. That would provide time for Revenue Department workers to make changes so Minnesotans filing income tax returns before the April 15 deadline will not have to amend their returns.

The action 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.”

Skoe said one of the major improvements senators made was to increase the Working Family Credit that helps low-income Minnesotans.

The Senate vote came after three-and-a-half hours of debate. Two conservative Republicans and three liberal Democrats opposed it.

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

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 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.

A rush was on to pass the tax bill as soon as possible as the income tax deadline nears.

Revenue Commissioner Myron Frans said that “every day counts” as taxpayers increasingly are filing tax returns.

Frans said that his staff will work through the weekend to update documents to take into account changes in the bill that affect returns now being filed. The Revenue Department also will work with tax preparers and tax software companies to help them make needed changes.

Later today, Frans was expected to give taxpayers guidance about whether they should go ahead and file tax returns or wait until the changes can be implemented. Senate Majority Leader Tom Bakk, D-Cook, said on Thursday that some should wait until next week to file.

The tax bill rewrites some state tax laws to conform to federal law, which would lower thousands of Minnesotans’ income taxes. It also would overturn business sales taxes approved last year, including those placed on farm equipment and other commercial repair work and on some on technology sales, as well as a warehousing tax that was to take effect April 1.

During Friday tax debate, several GOP senators offered amendments to take money from a planned $150 million budget reserve increase to support other tax breaks. All failed.

GOP senators unsuccessfully tried to kill a planned $63 million Senate office building.

Republicans frequently reminded Democrats that they increased taxes more than $2 billion last year, but only want to cut taxes $432 million this year.

“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.

He said he would vote for the bill “in hope that we will do more in the future.”

Taxes for up to 500,000 Minnesotans could fall under the bill. More than $200 million in income tax breaks for individuals would happen because state law would match federal tax law and another $200 million-plus in sales tax reductions would be delivered to businesses.

The bill makes more than 50,000 low-income families eligible for larger benefits under the Working Family Credit designed provide work incentives. More than 280,000 students would qualify for new student loan deductions.

The legislation would provide tax breaks for adoptive parents, homeowners facing foreclosure and teacher classroom expenses. More breaks would be available to investors in greater Minnesota, women-owned and minority-owned businesses.

It also eliminates a gift tax passed last year and easing the burden of the estate tax, both of which made it costly to pass small businesses and farms to the next generation.

The House passed a $503 million tax cut March 6 and Dayton wanted taxes cut $616 million. Another tax bill is expected yet this legislative session, which must end May 19, and it could include deeper cuts.

Senate tax bill holds for a day

Skoe, Bakk (Senate Media Services photo)

By Don Davis

Tax cuts may come to those who wait.

Democrats who control the Minnesota Legislature were fired up and ready to cut taxes Thursday, but Senate Republicans refused to allow a $432 million tax-cut bill come up for a vote, saying they and the public had not had time to read it.

“I think as a senator, I have the right to read the bill,” said Sen. Scott Newman, R-Hutchinson, saying he first saw the bill an hour earlier when the 62-page bill still was hot off the copy machine.

“Folks, they want us to do it and do it right,” Sen. Bill Ingebrigtsen, R-Alexandria, told fellow senators about the desire of Minnesotans that lawmakers know what is in the bill before voting. “We need more than a couple of hours; Minnesotans expect that.”

Both senators and representatives are expected to vote on the bill today.

Revenue Commissioner Myron Frans said his department had been working on making the many changes needed as more and more taxpayers file returns ahead of their April 15 deadline, but that work stopped Thursday when the tax bill stopped.

“Every day matters,” Frans said, adding that he could not give specifics about how the day delay will affect taxpayers.

About 40 percent of Minnesota taxpayers file their income tax returns between April 1 and April 15, and on Thursday, Frans said so many changes in tax laws are contained in the stalled bill that his department, tax preparers and software companies face a mountain of work to keep up.

Minnesotans who already have filed returns may need to amend them if they want new tax cuts contained in the bill.

Senate Majority Leader Tom Bakk, D-Cook, suggested that taxpayers who think they might benefit from the changes should wait until next week to send in their returns. Frans and Gov. Mark Dayton refused to make any such recommendations.

Most cuts in the Senate bill center on two areas:

– Rewriting some state tax laws to conform to federal law, which would lower many Minnesotans’ income taxes.

– Overturning business sales taxes last year’s Legislature approved, including those placed on farm equipment and other commercial repair work, some on technology sales and a warehousing that was to take effect April 1.

House and Senate bills would make more than 50,000 low-income families eligible for larger benefits under the Working Family Credit designed provide work incentives. More than 280,000 students would qualify for new student loan deductions.

The legislation would provide tax breaks for adoptive parents, homeowners facing foreclosure and teacher classroom expenses.

During a hastily called news conference, Dayton thanked Bakk and Senate Tax Chairman Rod Skoe, D-Clearbrook, for trying to pass the tax bill Thursday, which was a day after a deadline the governor had given lawmakers.

Two days earlier, Dayton chastised Democratic Senate leaders for delaying the bill. He said Bakk refused to bring up the tax bill until lawmakers approve a new Senate office building.

On Thursday, Bakk accompanied Dayton to the news conference as they criticized Republicans for delaying the bill.

A two-thirds majority of senators was needed to suspend the rules, and without GOP votes, there were not enough Democrats to begin the tax debate. The vote was 38-28.

“There are provisions in this bill that some of our members have not seen…” Senate Minority Leader David Hann, R-Eden Prairie, said. “We think tomorrow is just fine.”

The Senate is to take up the tax bill when it convenes at 9:30 a.m. today, and if it passes, the House expects to take it up later in the day. House Republicans gave no indication they plan to delay the bill.

The Senate Taxes Committee passed the bill Thursday morning, minutes before the full Senate convened.

Skoe said that the bill balances a desire to trim taxes with the need to increase state budget reserves.

“The state is in the best financial state it has been in since 1999 and I do not want the state to return to the financial uncertainty of the 2000s,” Skoe said.

Skoe also has been part of a Senate effort to increase state budget reserves $150 million to provide a cushion in case there are fiscal problems.

The House passed a $503 million tax cut on March 6 and Democratic Gov. Mark Dayton wanted them cut $616 million. Another tax bill is expected yet this legislative session, which must end May 19, and it could include deeper cuts.

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Key points of a Minnesota Senate tax bill include income and business tax cuts.

– Total net tax cuts: $432 million.

– Change state tax law to match federal law and increase Working Family Tax Credit: $226 million.

– Repeal business tax cuts passed last year: $232 million.

– Repeal gift tax and increase estate tax threshold: $30 million.

Note: Individual tax cut figures do not add up $432 million because bill also includes some minor revenue increases.

Hann

Legislature inches toward tax cuts

By Don Davis

Minnesota lawmakers edged closer to passing millions of dollars in tax cuts today.

The Senate Taxes Committee passed a bill this morning chopping taxes $432 million, giving lawmakers a chance to pass the measure by day’s end.

“There are a lot of positives here,” Mike Hickey of the National Federation of Independent Business said before committee members approved the tax bill on a voice vote.

Senate Taxes Chairman Rod Skoe, D-Clearbrook, said that the bill balances the desire to trim taxes with the need to increase state budget reserves.

“The state is in the best financial state it has been in since 1999 and I do not want the state to return to the financial uncertainty of the 2000s,” Skoe said.

Skoe also has been part of a Senate effort to increase state budget reserves $150 million to provide a cushion in case there are fiscal problems.

The House passed a $503 million tax cut on March 6 and Democratic Gov. Mark Dayton wanted them cut $616 million. Another tax bill is expected yet this legislative session, which must end May 19, and it could include deeper cuts.

Most cuts in the bill being considered today centered on two areas:

– Rewriting some state tax laws to conform to federal law, which would lower many Minnesotans’ income taxes.

– Overturning business sales taxes last year’s Legislature approved, including those placed on farm equipment and other commercial repair work, some on technology sales and a warehousing tax that was to take effect April 1.

Republicans generally supported the tax cuts, and wanted more, but were critical of what they called “mistakes” the Democratic-controlled Legislature passed last year when it tacked sales taxes onto many businesses.

“This is akin to robbing $100 from somebody on the street and giving them $2 back,” Sen. Roger Chamberlain, R-Lino Lakes, said.

Today’s work follows harsh comments Dayton made Tuesday, claiming Democratic Senate leaders were holding up a tax cut bill in hopes of getting House approval to construct a new Senate office building. Within 90 minutes of Dayton’s comments, Senate Majority Leader Tom Bakk, D-Cook, and Skoe called in reporters and said they planned to vote on the tax bill today.

Time is important, Revenue Commissioner Myron Frans said, because 40 percent of Minnesotans probably will file income tax returns in April.

If the tax bill passes today, Frans says his staff will work through the weekend to update computer software and make other changes. He said private tax businesses and software companies also can make needed changes in time to help tax filers.

Senators expected to take up the bill this afternoon, and the House could return later in the day to consider it. If the House does not agree with the Senate bill, which is similar to the House bill, it would go to negotiations and delay implementation of the tax cuts.

Up to 500,000 Minnesotans could see lower taxes under the Senate bill. The bill includes more than $200 million in income tax breaks for individuals and another $200 million-plus in sales tax reductions for businesses.

The Senate tax bill is smaller than the House measure mainly because the upper chamber delays a business sales tax exemption on capital equipment purchases from taking effect until mid-2015, generating $64 million in additional tax revenue.

House and Senate bills would make more than 50,000 low-income families eligible for larger benefits under the Working Family Credit designed provide work incentives. More than 280,000 students would qualify for new student loan deductions.

The legislation would provide tax breaks for adoptive parents, homeowners facing foreclosure and teacher classroom expenses.

One of the major tax savings that could come from the state conforming to federal law is not included in the bills: the so-called marriage penalty.

State law forces married Minnesotans to pay more than if they were not married. While the House and Senate would change state law and lower taxes for income taxes due in 2015, taxes being paid now would not be affected. Republican efforts to make the change for current returns failed.

Another GOP attempt that failed would have reimbursed farmers who paid sales tax on farm equipment repairs since the tax began last year. Other business that paid new taxes also would not get refunds.

“While I am happy and pleased that we are addressing these oversights from last session … in the meantime great harm has been done to many businesses,” Chamberlain said.

St. Paul Pioneer Press reporter Bill Salisbury contributed to this story.

Senate tax bill arrives after Dayton lobs stalling complaint

Dayton

By Don Davis

Minnesota Gov. Mark Dayton on Tuesday used his first public appearance since Feb. 8 to accuse fellow Democrats who lead the Senate of stalling a tax-cut bill until they won approval for a new Senate office building.

An hour and a half later, Senate Majority Leader Tom Bakk of Cook and Tax Chairman Rod Skoe of Clearbrook showed off a tax bill they hope senators pass Thursday, without a building agreement. They denied that Dayton’s comments changed their plans.

Dayton, who has been in a body cast since Feb. 10 hip surgery, walked to a podium aided by crutches Tuesday afternoon and began to rip Bakk for telling him and House Democratic leaders that he would not allow a tax bill to pass until the House rules committee approves a new Senate building.

“I’m very, very, very disappointed they would not pass a bill,” Dayton said.

The House passed a $500 million tax cut March 6. It would stop three sales taxes businesses pay as well as conform to federal tax laws.

Dayton and Revenue Commissioner Myron Frans said that tax cuts needed to be finished by today or Minnesotans would struggle to get tax breaks that come from matching state and federal laws.

Skoe had been saying that senators wanted more time to investigate implications of various tax provisions, and they would wrap up a bill by month’s end.

Democratic and Republicans senators must agree to suspend Senate rules before the Thursday vote will occur.

When Bakk and Skoe sat down with reporters after Dayton’s comments, they began talking about the tax bill, not mentioning Dayton. Bakk did not directly answer the question, asked multiple times, about whether in meeting with Dayton and House Speaker Paul Thissen he linked the tax bill with a new building.

Thissen, D-Minneapolis, agreed with Dayton that Bakk linked the two.

“We have all along urged the House rules committee to act …” Bakk said when asked about the tax-building link. “We don’t understand why the House rules committee hasn’t acted.”

The only action needed before a new Senate office building is constructed is House rules committee approval. However, House members have joined Dayton in expressing reservations about the building.

Bakk said it is needed.

Due to an extensive Capitol renovation project, Bakk said, senators will not have offices or a chamber in which to meet in 2016 if something is not done. Construction will continue at least through 2016.

The renovation is stealing space from the Senate, and doubling what the governor’s office occupies, and there will not be enough room for senators and staff in the finished building, the majority leader said.

Bakk said the Senate will lose 38,000 square feet to renovation.

While representatives have not decided whether a new building is even needed, Dayton said he thinks a modest one should be built. But he was not happy that Bakk linked lower taxes with it.

Dayton said he returned to the Mayo Clinic in Rochester on Monday to have the body cast removed, a week earlier than planned, because he needed to get back to the Capitol to fight for the tax cuts. “It was time for me to come back because of the deadline.”

“I can’t kick any field goals for a while,” he said, but other than using crutches most of the time he is doing well.

He may not be kicking field goals, but he kicked senators’ tactics. “These are DFL legislators, I’m sorry to say. … It’s just inexcusable.”

Dayton said an entire half-hour meeting earlier Tuesday was about the Senate building because the Senate insisted on discussing it before taxes.

“I need to take this to the people of Minnesota,” Dayton said, adding that he plans to start meeting with legislators about taxes today.

Thissen said Bakk wanted to include Senate building approval in the tax bill. Skoe and Bakk said there is no mention of the building in their bill, which they would not give to reporters Tuesday night.

Bakk said that taking up the tax bill by Thursday would be an “extraordinary accomplishment.” A second bill, including some tax cuts, is expected before lawmakers adjourn for the year in May.

The Senate bill will would cut taxes nearly $70 million less than the House, but would add $150 million to the state budget reserve, Skoe said.

Bakk, Skoe

Legislative notebook: No tax cut vote

By Don Davis

Minnesota senators will not rush to judgment on a $500 million tax cut the House passed last week.

On Monday, Senate Minority Leader David Hann, R-Eden Prairie, wanted senators to immediately take up the tax bill House members passed Thursday, but Democrats defeated the attempt 38-26.

Gov. Mark Dayton wants the tax-cut bill on his desk by Friday. Hann agreed.

“Thousands of Minnesota are in the process of filing their taxes and they deserve to know what we are going to do.,” Hann said

Senate Tax Chairman Rod Skoe, D-Clearbrook, said that the tax cuts need more “contemplating.”

The House bill matches state law to many federal tax provisions, saving Minnesotans money as they file taxes this time of year. However, the “marriage penalty” that costs couples more in taxes was not included for taxes being paid this year. The penalty would be eliminated if state and federal tax laws matched.

Skoe said the marriage penalty is one of the issues the Senate needs to examine.

In an interview last week, Skoe said the Senate will cut taxes less than the House.

 

Lunch aid passes

Minnesota will increase its school lunch subsidy for poor students if a bill headed to a full House vote passes.

The issue arose after it was revealed that a majority of Minnesota public schools withhold hot lunches to students who could not pay. There also were reports that school officials took away meals from students in lunch lines and dumped them in the trash if they had no money in their lunch accounts.

A bill the House Ways and Means Committee approved Monday would spend $3.5 million to increase state support to hot lunches from 12.5 cents to 52.5 cents per meal. Federal money pays the bulk of the cost of lunches for poor students.

 

Pay increase OK’d

Minnesota state employees will receive raises, in some cases for the first time in years, if the House agrees with the Senate.

Senators Monday approved 43-22 pay raises of 3 percent this year and again next year for most state workers.

“More than half of our state employees received zero percent increase,” Sen. James Metzen, D-South St. Paul, said, because of a struggling economy. “These state employees helped us get through the recession.”

While workers will get more pay, Metzen said they also will pay more for health insurance.

Sen. Michelle Benson, R-Ham Lake, said some private businesses have not recovered from the recession, indicating it may be too soon to give government workers more money while private firms continue to struggle.

A business in her community, she said, laid off people and cut existing workers’ pay. “Little by little, as the economy recovered,” the pay has increased, she added.

The bill also is moving through the House committee process.

 

Money aimed at obesity

A Minnesota senator wants the state to pay $65,000 to fund a study to find how to reduce and prevent childhood obesity.

Sen. Alice Johnson, D-Fridley, talked about her idea for a nine-month study on Monday. “Currently, when a doctor or school nurse identifies an obese child there are no intervention programs to refer that child to. The purpose of this study is to help develop such a program.”

The study would provide help to 80 children diagnosed as obese. Results of the study could influence future legislation.

The Minnesota Department of Health estimates that the effects of obesity cost the state $2.8 billion annually.

 

Broadband bill advances

A Senate committee unanimously voted to spend $100 million next year to boost rural high-speed Internet.

The committee deals with rural issues, and is composed mostly of rural lawmakers. The bill could face opposition in its next stop, the Senate Finance Committee.

Bill sponsor Sen. Matt Schmit, D-Red Wing, said there is “a drastic difference” between rural and urban Internet speeds.

A governor’s broadband task force set speed goals, and most rural parts of the state fall short.

Rock County Commissioner Jody Reisch said he has worked for an East Coast insurance company for 20 years, and now can meet on line instead of flying to New York.

However, he said, it is difficult to get broadband speed fast enough in rural Minnesota.

It is not just businesses that need the fast connection, he said.

“My kids no longer take textbooks home,” he added, but need to log onto web sites for their homework.

Gov. Mark Dayton has said he supports high-speed broadband, but does not think there is a plan to expand the service to rural areas with enough specifics for him to support.

 

House turns down gifts

The Minnesota House wants to overturn a law passed last year that allows organizations to buy meals for lawmakers.

“They love us to come and eat their free food…” Rep. Ryan Winkler, D-Golden Valley, said Monday before the House passed his bill to ban such group feeds 123-3. “They want their agenda on our minds.”

Last year’s law allows organizations to treat legislators to a meal, as long as all legislators are invited. Winkler’s bill would leave previous law that banned the practice of giving lawmakers gifts.

Rep. Debra Hilstrom, D-Brooklyn Center, said that many groups “cannot afford the same access” as those who put on the legislative meals.

Winkler’s bill would take effect Aug. 1. A similar bill has not moved in the Senate.