Tag Archives: taxes

Capitol, floods, veterans, disaster bills end 2013 legislative session

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Thissen gavels out session

By Don Davis

The Minnesota Legislature ended a historic 2013 session seconds before midnight Monday after voting to renovate the state Capitol building, help communities fight floods, give veterans a new facility and provide disaster assistance.

It was an end to a session that approved gay marriage, increased taxes $2 billion and boosted spending for education and other priorities of Democrats who control the House, Senate and governor’s office.

“We had a tough session,” Senate Minority Leader David Hann, R-Eden Prairie, said, but there were many bills that passed with bipartisan support.

“We can have strong disagreements and still keep the conversation civil,” Senate Majority Leader Tom Bakk, DFL-Cook, said.

“Tomorrow everybody’s going to try to put their political spin on it,” Bakk added. “But I’m very proud.”

House Speaker Paul Thissen, DFL-Minneapolis, said that while Republicans accuse Democrats of overreaching this year, his party did what it could to catch up after 10 years of budget cuts.

House Majority Leader Erin Murphy, DFL-St. Paul, said Democrats and Republicans worked together to end the session. Minority Leader Kurt Daudt, R-Crown, said Republicans brought the two parties together to wrap things up.

After working leisurely much of Monday, the pace kicked into high gear after 9 p.m.

The key to the session-ending deal is a $177 million public works bill, funded by the state selling bonds. Once House and Senate leaders from both parties agreed to the bonding bill, a day-long logjam broke, allowing other bills to pass quickly with little debate.

The House passed the public works bill 121-10 and the Senate 57-6. Last week, the House defeated an $800 million proposal with opponents saying it was too big.

The largest portion of the bonding bill is fixing the state Capitol, a $132 million expenditure. More money will be needed in future years to complete the project.

“Our Capitol is the symbol of Minnesota, let it stand solid and strong to serve generations of Minnesotans long into the future…” Rep. Dean Urdahl, R-Grove City, said. “This building has no lobbyist, it has us, and we must not let it down.”

The 108-year-old building’s walls are crumbling and state officials say mechanical systems need to be replaced.

Also in the bill is $20 million for flood prevention projects, $19 million for a Minneapolis Veterans’ Home building and $8 million for various sewage projects. Some previously approved bonds no longer needed are canceled.

Once the bonding bill passed, the door opened for spending $1.75 million to help southwestern Minnesota recover from an April ice storm.

Federal funds will pay three-fourths of the public property damage repair.

The bill overwhelmingly passed the House and Senate.

Sen. Bill Weber, R-Luverne, told senators there is $6 million in public property damage, but more than $20 million in damage overall.

The bonding bill also looks to prevent future disasters. It spends $20 million for flood prevention work in Ada, Afton, Alvarado, Argyle, Austin, Borup, Breckenridge, Browntown, Climax, Crookston, Delano, Granite Falls, Inver Grove Heights, Maynard, Melrose, Minneota, Minnesota River area, Montevideo, Moorhead, Newport Nielsville, Oakport Township, Oslo, Roseau, Rushford, St. Vincent and Shelley. The bill says Moorhead should get priority for funds needs.

While the Capitol is the headline project in the bonding bill, a $22.7 million parking ramp nearby also is funded.

As time ran out on the session, a 10-hour debate, spread over the last three days, about allowing some child care providers and personal care attendants to join unions ended with conflict.

Thissen announced that the bill won on a 68-66 vote, prompting loud applause and cheers from union supporters in the House gallery. Such demonstrations violate House rules.

Thissen began to gavel down the demonstration, sternly yelling: “Stop, stop.”

Several Republicans began to protest the demonstration and Rep. Pat Garofalo, R-Farmington, jumped up and shouted into his microphone: “Just let them applaud, they own the place.”

Republicans often said during the unionization debate that Democrats were pushing the bill to reward their union supporters.

In its final days, the Legislature passed bills to:

– Raise taxes $2 billion.

– Fund the state $38 billion, two-year budget.

– Allow same-sex couples to marry.

– Fund arts and outdoors programs from a sales tax increase voters approved in 2008.

– Ask Minnesotans to vote to constitutionally establish a council to set legislators’ pay because, as Sen. Kent Eken, DFL-Twin Valley, said, it is a conflict of interest for lawmakers to raise their own pay.

New income taxes will be placed on the top 2 percent of Minnesota earners, cigarette taxes increased and sales taxes charged on some business purchases.

Lawmakers wrapped up most of Democrats’ priorities as they neared their deadline. But they also left undone other priorities such as a school anti-bullying bill, a minimum wage increase and gun control.

Reporter Danielle Killey contributed to this story.

Legislative notebook: Farmers want clarification

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Franson

By Don Davis and Danielle Killey

Farmers are not sure how much more they will be taxed after the Democratic-controlled Legislature adopted a $2 billion tax increase.

It appears that farmers will pay sales tax on fertilizer stored in facilities they do not own and on equipment repair, but not parts. Rural legislators said they remain uncertain what else could be taxed.

Rep. Rod Hamilton, R-Mountain Lake, arose during late Sunday debate on the legislative tax bill to question the impact on agriculture.

House Tax Chairwoman Ann Lenczewski, DFL-Bloomington, said she is not a farmer and could not answer all of Hamilton’s questions.

“Our intent is to take another look at this,” Lenczewski said.

The tax provisions do not begin until April, giving lawmakers a chance to change the law after they return to session Feb. 25.

“I think we understand some of the complications here,” Lenczewski said after hearing from Hamilton and other rural Republicans.

Legislators began debate soon after the tax bill was released. Once Hamilton saw the potential agriculture impact, he began contacting farm groups, which expressed their concern.

Democrats, however, said there is enough good in the tax bill for farmers that the added tax should not hurt them.

“I do know what they are going to benefit from in this bill,” Rep. Paul Marquart, DFL-Dilworth, said, including lower property taxes.

Marquart said the bill boosts county and township assistance, which should lower property taxes.

Rep. Joe Radinovich, DFL-Crosby, said farmers are concerned about their overall community and new taxes are helping programs such as in education.

Rep. Erik Simonson, DFL-Duluth, said his community warehouses taconite, wind turbines and other goods that would be taxed under the bill. Even so, he said, he supports the new tax.

Red Wing Shoes could face problems with the new tax, said Rep. Tim Kelly, R-Red Wing. The company needs a new warehouse, he said, and it could be built in Missouri.

“If they put that warehouse in Missouri, where do they expand their business?” Kelly asked. “Where do they make more shoes?”

Unions win right

Union supporters celebrated Monday after the House voted 68-66 to allow some child care providers and personal care attendants to join unions.

Five Democrats joined Republicans in voting against the measure: Reps. Tim Faust of Hinckley, Jay McNamar of Elbow Lake, Tina Liebling of Rochester, Kim Norton of Rochester and Gene Pelowski of Winona.

Pro-union child care providers and care attendants were happy, saying they will do better because unions will be able to get more state funds for them, as well as better rules.

“My work helps the state save countless dollars that would be spent on a long-term care institution if I wasn’t there to work with my grandson and keep him living independently,” Vicki Dewald of Detroit Lakes said. “By forming a union we can improve conditions for workers, which will keep good PCAs and improve the quality of care clients receive.”

The bill, expected to be signed into law, will give providers a more stable state funding source, Rep. Carly Melin said, after years of budget cuts.

“We are not forming a union here today, we are authorizing people the right to vote,” the Hibbing Democrat said.

Union opponents say the bill is unconstitutional and expect to challenge it in court, probably within days.

Rep. Mary Franson, R-Alexandria, told about her years as a child care provider, a business she started in part so she could care for her children.

“I ask you to search your hearts today,” she told her colleagues before the vote.

“This bill places unions and government between child care providers and their clients,” said Rep. Steve Drazkowski, R-Mazeppa.

Legacy spending OK’d

The House approved a bill 77-57 and the Senate 43-21 to fund outdoors and cultural programs.

The so-called legacy bill spends about $496 million on parks and trails, arts and other programs with the money raised from a sales tax voters approved in 2008.

The bill faced some resistance earlier in the session as lawmakers debated rural and urban program funding, and some rural lawmakers continued to complain Monday that parks in their areas were shorted.

The parks funding is split to 40 percent for the Twin Cities area, 40 percent for state parks and 20 percent for greater Minnesota parks.

The bill also creates a greater Minnesota commission to make parks and trails recommendations.

It includes funding for projects such as the Cannon River headwaters, the Lakewalk Trail in Duluth, the Mesabi Trail and parks in Bemidji and Moorhead.

Rep. Mary Franson, R-Alexandria, and other members said sports groups and organizations are opposed to the bill.

“I don’t understand why,” said bill author Rep. Phyllis Kahn, DFL-Minneapolis. “It does exactly everything they asked us to do.”

She said the bill follows recommendations from the Lessard-Sams Outdoor Heritage Council and shows a “strong commitment” to arts and cultural programs.

“We provide the resources needed to enrich our communities and keep our land, water, and air clean and healthy throughout Minnesota,” she said.

 Tax levies limited

One of the little-noticed provisions of a tax bill legislators approved near the end of their session limits city and county property tax levies.

One of the last additions to the bill placed a one-year levy limit on cities bigger than 2,500 population and counties 5,000 or larger.

The League of Minnesota Cities reports that the cap “essentially limits revenue growth to 3 percent for taxes levied this fall for collection in 2014.”

Budget pieces slowly begin moving toward governor’s office

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Rep. Paul Marquart

By Don Davis

Minnesota legislators have taken baby steps in passing a $38 billion, two-year budget that must be finished by midnight Monday.

The biggest step so far was set to come late Friday or early Saturday as the House edged toward approving money for state-subsidized health programs, the second-largest part of the state budget.

“I think we have time to get the budget bills done,” House Majority Leader Erin Murphy, DFL-St. Paul, said even as Republicans complained that the Legislature was debating nonbudget bills.

“I’m concerned that with the amount of time left in the legislative session, we may not have enough time for public input and debate on these important bills,” said Sen. Bill Ingebrigtsen, R-Alexandria.

Budget bills headed for Gov. Mark Dayton’s approval fund public safety, judiciary, higher education and economic development programs.

Much of the budget still was being negotiated among the Democratic-controlled House and Senate and Democratic governor’s office, including measures to fund natural resources, agriculture, public schools, various state agencies and transportation.

Some of the budget became clearer Friday. Murphy said she doubted gasoline taxes would rise, as some proposed. She also said legislative pay likely will not be increased.

A bill raising $2 billion in taxes remained in negotiators’ hands late Friday, but Dayton and legislative leaders gave them instructions to raise income taxes on the highest-paid Minnesotans, add a sales tax to some business services and raise cigarette taxes.

The House began a debate late Friday to fund state health programs for the elderly and disabled.

Supporters of nursing homes and other long-term care organizations said the health and human services bill averts a crisis.

The bill increases nursing home funding 5 percent in the first year of the next budget cycle and 1.5 percent in the second year.

Still, long-term care supporters say the work is not over to find sustainable funding for years to come.

“Every year that we put off discussions and decisions on sustainable long-term care funding will only make the problem more difficult to solve,” President Gayle Kvenvold of Aging Services of Minnesota said. “The state’s current funding approach is already strained.”

Earlier Friday, the House defeated a plan to spend $800 million on public works projects across the state. The vote was 76-56, but bills funded by the state selling bonds need 81 votes.

House Minority Leader Kurt Daudt, R-Crown, said the bonding bill and a proposed constitutional amendment that filled Friday afternoon are “distractions” from setting the state’s budget. The constitutional amendment would remove the decision about legislators’ pay from the Legislature.

The House plans to take a break from the budget for a time Saturday, perhaps a long time.

Nearly 100 amendments have been filed for a bill to allow child care providers and personal care attendants to join unions. There were fewer amendments than that when senators debated the bill, a debate that stretched 17 hours before it passed 35-32.

Murphy said she will use “all of the tools in the toolbox” to shorten debate if Republicans venture into filibuster territory instead of what she considers legitimate debate.

Rep. Jason Metsa, DFL-Virginia, sponsored the legislative pay amendment.

“This isn’t a bill about giving legislators a pay raise,” he said. “It is about being transparent.”

Daudt said there was no need to take up the bill this year because Metsa’s plan calls for voters to consider the measure in 2016, leaving three more legislative sessions where it could be debated.

Daudt and other Republicans raised their voices during the pay debate.

“Uff-da. I think the caps lock was on there,” Murphy said.

Legislative notebook: Legislature approves freezing college tuitions

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Rep. Carly Melin

By Danielle Killey and Don Davis

A bill funding Minnesota State Colleges and Universities and the University of Minnesota systems freezes tuitions.

Senators passed the bill 44-22 and the House 76-56 Friday.

Democrats said their bill restores funding that was cut under Republicans.

“This bill will finally reverse that trend, which has been making college education more expensive and less affordable at a time when it is more important,” Sen. Kent Eken, DFL-Twin Valley, said.

The bill gives the university $42.6 million and MnSCU $95 million to freeze tuition for the next two years.

Republicans were divided over the Democrat-written bill.

Sen. Torrey Westrom, R-Elbow Lake, complained that the bill includes what used to be known as the DREAM Act, a provision to allow undocumented immigrants access to state-run colleges and universities like other Minnesotans.

Westrom said it “dilutes money Minnesota students will get.”

Even if those students do get financial breaks, they probably would have a hard time finding jobs after graduation, he added. “Without employment, that becomes a nearly impossible task.”

Other Republicans praised the bill.

“This is a good bill for the students, all students in Minnesota,” Rep. Bud Nornes, R-Fergus Falls, said.

MnSCU Chancellor Steven Rosenstone said the bill “will help increase access to higher education for all Minnesotans and ensure that our colleges and universities remain affordable and within reach of students from all backgrounds.”

Public safety OK’d

The House and Senate approved a bill to fund courts, crime victim programs and law enforcement 121-12 and 64-1, respectively.

The bill also expands information in the background check system for gun purchases. It does not broaden background checks or ban any weapons or ammunition.

“We have been successful in threading the political needle on the reducing gun violence issue by finding the funding and the language to fill in the gaps in the background check database, particularly to include the mental health and civil commitment data,” Senate Judiciary Committee Chairman Ron Latz, DFL-St. Louis Park, said.

The bill allocates about $5.6 million for upgrading the criminal history system, $2.7 million for the state’s crime statistic reporting system and $1 million to integrate non-electronic data into the Bureau of Criminal Apprehension’s system.

“This will greatly improve our background check system across the state by putting the missing data into the background check system,” House Judiciary Finance and Policy Committee Chairwoman Debra Hilstrom, DFL-Brooklyn Center, said.

The bill includes $3 million for crime victim shelters, services and programs.

It also sets aside $860,000 over the next two years to create a School Safety Center to assess threats to Minnesota schools and provide training and assistance for school safety.

Judges also will see salary increases of 3 percent each year in the next two years.

Senate approves jobs

The Senate approved a jobs and economic development bill 40-27, sending it to Gov. Mark Dayton’s desk for a signature.

The bill would fund job creation, training and economic development programs. It also sets energy standards, including requiring 1.5 percent of investor-owned utilities’ power to come from solar energy by 2020.

“This bill may be the most significant job creation bill in many years, making economic development across the state a top priority,” sponsor Sen. David Tomassoni, DFL-Chisholm, said. “The energy provisions in this bill allow our communities to get in on the solar boom happening across America. More importantly, we make sure that the solar development happening in Minnesota, directly benefits Minnesotans.”

The bill offers incentives for Minnesota-made solar products.

The House approved the bill earlier.

“It’s not a piecemeal approach,” Rep. Tom Anzelc, DFL-Balsam Township, said. “It’s an all-of-the-above strategy that pulls out all the stops when it comes to job creation.”

Warehousing tax, solar linked

The Minnesota Trucking Association says a plan to extend the state sales tax to warehousing services could impact state solar power efforts.

MTA President John Hausladen said the tax expansion “will drive customers to position their inventories in Wisconsin, Iowa and the Dakotas. Minnesota warehouse space will shrink, along with current and future solar generation capacity.”

A recently passed plan would require solar electricity generation to reach 1.5 percent by 2020, but the sales tax expansion could hurt that, the organization argues.

Foreclosure protections OK’d

A bill that would offer help to Minnesotans facing foreclosure passed the Senate 61-1.

The bill is aimed at protecting homeowners through measures including requiring all information on foreclosures be readily available, banning “dual tracking,” where banks or loan servicers foreclose without answering whether the loan can be modified and covering lawyer and court costs for homeowners to bring the foreclosure to court if loan offices fail to comply with the law.

Cigarette tax praised

Health organizations praised a proposed $1.60-per-pack cigarette tax hike.

“This significant bump in the price of tobacco products will inspire many adults to quit and help keep our kids from smoking,” Matt Schafer of the American Cancer Society said.

The Raise it for Health coalition said the increase could save more than 25,700 Minnesotans from premature smoking-related deaths.

The increase would set the state’s total cigarette tax at $2.83 per pack.

Final $2 billion tax deal merges 3 plans

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Bakk, Thissen

By Don Davis

The Minnesota House, Senate and governor’s office agreed to a tax plan Thursday night, four months after the Legislature started and four days before lawmakers must wrap up work for the year.

The tax plan is a merger of what the Democratic-controlled House and Senate and Democratic Gov. Mark Dayton wanted. It is a refinement of a tax and budget deal announced Sunday.

The tax increase would bring in $2 billion in new revenue to help support a $38 billion, two-year budget.

While legislative tax negotiators still need to fill in details, here is what Dayton, Senate Majority Leader Tom Bakk, DFL-Cook, and House Speaker Paul Thissen, DFL-Minneapolis, announced Thursday night:

– The top 2 percent of Minnesota earners will pay 9.85 percent of their income in taxes, up 2 percentage points from the current top rate. The tax affects couples with at least $250,000 in taxable income and individuals earning $150,000.

– Sales taxes will not rise on consumer goods such as clothing, but some businesses will pay sales taxes on services and goods provided by other businesses. Included will be electronic equipment and repair and warehousing.

– Cigarette taxes will rise $1.60 a pack to $2.52 a pick, the same as Wisconsin charges and higher than any other Minnesota neighbor.

– Minnesotans should see about $400 million in property tax relief due to higher city aid payments and dropping a requirement that cities and counties pay sales tax. Also, property tax refunds would be enriched.

– Some corporate tax loopholes will be closed.

“There are a lot of details for the tax committee to work out,” Thissen said.

Bakk said the rest of the state budget should fall in place quickly now that the tax deal is in place.

“This is the lynchpin of the session,” Bakk said.

Dayton said the latest agreement fulfills promises Democrats have made to improve education funding and make other changes without using financial gimmicks.

Democrats said they are imposing no new taxes on middle-class Minnesotans. However, Republicans disagreed.

“Every Minnesotan will pay more,” said House Minority Leader Kurt Daudt, R-Crown.

Senate Minority Leader David Hann, R-Eden Prairie, said the business sales tax Democrats propose will filter down and be paid by average Minnesotans.

The DFL leaders dropped a House plan to place a surcharge on the richest of the rich to repay money the state has borrowed from schools.

Dayton and legislative leaders said they will pass a $400 million Mayo Clinic request, even though Senate Tax Chairman Rod Skoe, DFL-Clearbrook, and House Tax Chairwoman Ann Lenczewski, DFL-Bloomington, said they do not place a priority on the project. Mayo seeks state aid to prepare Rochester for a $3 billion Mayo expansion.

Lenczewski said “we have paid far too much time” on the Mayo plan this year. “I’m at my limit.”

She said that as the session’s end approaches, members should not rush through a plan.

“I’m willing to wait until next year,” Lenczewski said.

Skoe said he had his staff working on “more important issues” than the Mayo plan.

Dayton and legislative leaders said tuition at state-run colleges and universities will be frozen.

Democrats have enough votes to pass all of the provisions without Republican help.

Education is the largest single portion of the two-year budget that begins July 1. Negotiators continued to write that bill Thursday night, but the second-largest bill, funding state health programs, appeared close to wrapping up.

The first of nine budget bills — dealing with public safety and jobs — began showing up in the House and Senate Thursday after conference committees negotiated differences and rewrote bills passed earlier.

On the House floor today will be an $800 million public works bill to be funded by the state selling bonds. Other budget bills also are expected in both chambers.

With the state constitution setting Monday as the last day lawmakers can meet this year, unless the governor calls a special session, plans are in place to meet Saturday and Sunday.

On Saturday, the House is expected to take hours debating a bill allowing child care providers and personal care attendants to join unions. The Senate took a modern-day record 17 hours to debate the measure earlier this week.

Update: Smokers, corporations to provide stadium funding backup

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Frans

By Danielle Killey and Don Davis

Smokers will provide the backstop to Viking stadium construction funding, the governor and legislative leaders announced Thursday night.

If that is not enough, eliminating corporate tax loopholes will be a second backup to electronic pulltabs and bingo, which have failed to generate as much state revenue as expected.

Confirming a proposal Revenue Commissioner Myron Frans unveiled earlier in the day on behalf of the governor, the Democratic leaders said they agree on the plan. Gov. Mark Dayton, House Speaker Paul Thissen, DFL-Minneapolis, and Senate Majority Leader Tom Bakk, DFL-Cook, told reporters Thursday night that the proposal will be part of a tax bill expected to pass before Monday’s legislative adjournment deadline.

A cigarette tax increase and closing what some see as a corporate tax loophole would be backup sources if other revenue sources continue to fall short, though supporters say they hope money from electronic pulltabs and bingo will be enough to fund stadium construction.

Frans said the tax increases already were being discussed, but the money now would be earmarked to fund the Vikings stadium if needed.

About $24.5 million estimated to come from a cigarette tax increase would go to plug a possible deficit in stadium funding for the next two years.

The plan would raise the cigarette tax from $1.23 per pack to $2.52. That is the same as Wisconsin’s rate, the highest of Minnesota’s neighbors.

Republicans, who were not involved in drawing up the backup stadium finance plan, complained that the Dayton proposal would take money away from schools and other state needs.

Sen. Dave Thompson, R-Lakeville, said Dayton promised not to use general tax dollars to fund stadium construction. The funds from the cigarette tax and closing tax loopholes would go to the state’s General Fund, where Thompson said schools and other state programs get money.

“Why are we talking about the stadium now?” said Senate Minority Leader David Hann, R-Eden Prairie, with the end of this year’s session coming Monday.

When asked about the GOP allegations, an angry Dayton said the taxes are earmarked for a stadium and do not take money away from other needs.

“They want to screw up the project,” Dayton said of Republicans.

The stadium, replacing the downtown Minneapolis Metrodome, already is producing jobs, the governor said. Had the new stadium not been approved, a $400 million project with two office towers and other development would have gone to Des Moines, Iowa, Dayton said.

He called Republican opposition “political grandstanding.”

The law enacted last year to approve a nearly $1 billion stadium pinned the state’s $348 million contribution on electronic pulltab and bingo tax revenues.

“We’ve been disappointed with the rollout and how long it’s taken,” Frans said, but “we hope the original source will continue to grow.”

Closing the corporate tax loopholes would bring in about $26 million in the first year and $20 million annually after that, Frans said. Businesses now can avoid some state taxes by attributing sales to affiliates in other states, he said.

“It may never be used,” Frans emphasized of the new taxes. “The primary source still is charitable gambling.”

Smokers would help fund Vikings stadium construction

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Stadium drawing

By Don Davis

Minnesota legislative tax negotiators tentatively approved a plan today to use cigarette tax increase funds and close corporate tax loopholes to provide backup Vikings stadium construction funds.

Gov. Mark Dayton, who opposed cigarette tax increases when he campaigned for office, offered the plan to 10 legislative tax negotiators this morning.

Revenue Commissioner Myron Frans said Dayton does not support taxing sports memorabilia and stadium seats as part of the solution.

Also this morning, a key tax negotiator said she would be comfortable waiting until next year to decide how to help Rochester prepare for a $3 billion Mayo Clinic expansion.

The stadium funding question arose when the prime source of state revenue to repay construction loans fell far short of predictions. The law enacted last year to approve a downtown Minneapolis stadium depended on electronic pull tab and bingo tax revenues.

Dayton’s plan, to be further discussed by tax negotiators as the 2013 legislative session winds down by Monday, calls for increasing cigarette taxes to $2.52 per pack, up from the current $1.23.

The new tax would be the same as Wisconsin, which has the highest rate of any state around Minnesota.

A one-time stock fee on cigarettes to get to the new tax amount would go to fill in stadium funding deficits.

Other than the cigarette tax funds, the Dayton plan would close what some consider tax loopholes on corporations to bring in more revenue in future years if needed.

Pulltab and bingo tax receipts still would be the primary funding system, with the cigarette tax being used to back that up.

Also today, hopes dimmed for Mayo Clinic to get aid it has sought in preparing for a major Rochester expansion.

House Tax Chairwoman Ann Lenczewski, DFL-Bloomington, said that “we have paid far too much time” on the Mayo plan this year. “I’m willing to wait until next year.”

Senate Tax Chairman Rod Skoe, DFL-Clearbrook, said he has his staff working on “more important issues” than the Mayo plan.

Mayo wants millions of dollars to help Rochester improve infrastructure as the world-famous clinic would attract more patients.

No tax solution yet as Minnesota legislative session winds down

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Capitol visitors want more transportation money

By Danielle Killey and Don Davis

Taxes remain a key issue as the Minnesota House, Senate and governor’s office negotiate a final budget deal in the last days of the 2013 legislative session.

House-Senate tax conference committee members exchanged a number of proposals Wednesday, but did not come to a solution. They have agreed to raise about $2 billion in new revenue, but differ on how to do it.

Members are slowly coming closer to creating a new fourth-tier income tax bracket for the richest Minnesotans, likely to land somewhere between 8.94 percent and 10.6 percent. The current top tier rate is 7.85 percent.

The House also still wants a surcharge on those making $500,000 or more for up to two years, to repay schools for money the state borrowed from them. That would add up to nearly $900,000 on top of the $2 billion.

Committee members still disagree on alcohol and cigarette tax increases. The House proposes an alcohol tax, but the Senate does not include it, and they had not landed on a final cigarette tax increase amount by Wednesday evening.

House Taxes Committee Chairwoman Ann Lenczewski, DFL-Bloomington, said the House will propose Gov. Mark Dayton’s plan to fund a shortfall in Vikings stadium construction money, but the governor’s plan has not been released.

The members also are exploring sales tax changes such as expanding it to warehousing and storage, which primarily would affect businesses. The House proposed a 13 percent sports memorabilia tax to bring money to the state’s general fund as well.

Former tax chairman Rep. Greg Davids, R-Preston, said no matter where the committee lands, the total amount they plan to raise is too high for Republicans. “It’s so far gone for anyone in our caucus to support.”

Davids acknowledged that Republicans have little say in the final plan because Democrats have enough votes as the majority in the House and Senate to pass it.

“When you have no balance, this is what you get,” Davids said.

The Minnesota Constitution requires legislators to wrap up their work for the year Monday, and while tax debate continues, the first negotiated budget bills are headed to final votes.

A jobs and economic development bill was merged with one setting solar energy standards and was due for a late Wednesday House debate.

Major finance conference committees with work remaining Wednesday included those dealing with public school education, health and human services, environment and agriculture, transportation, public safety, higher education and state departments.

The House and Senate have passed their own versions of finance bills, and conference committee negotiators are merging their work with a budget plan offered by Dayton.

With most conference committee work expected to be done by Friday night, the end of the session likely will be busy with lawmakers passing the entire $38 billion, two-year budget in its final hours.

Republicans have said Democrats might struggle to meet their deadline.

“We’ve got several moving parts,” Davids said. “I don’t know if they can get done on time.”

Earlier this week, Senate Majority Leader Tom Bakk, DFL-Cook, worried aloud that Republicans could filibuster and delay progress on spending bills that make up the budget.

“It is possible they could talk things to death and run out the session,” Bakk said.

Democrats control the House, Senate and governor’s office and can pass nearly every bill without Republican help. However, a proposed $800 million public works finance bill does need some GOP votes, and the party’s legislative leaders have not been very supportive.

Update: Dems release budget and tax guidelines with details to come

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Bakk

By Don Davis

Minnesota political leaders have spent months preparing state budget plans, and eight days before the Legislature must adjourn for the year they announced they have reached agreement on some tax and spend guidelines.

Included in the budget framework is that the state would not raise sales taxes on consumer goods, such as clothing, but probably would add taxes businesses pay on sales to other businesses. They plan to raise income taxes on the top 2 percent of Minnesota earners and put a surcharge on taxes paid by the richest of the rich.

Cigarette taxes would go up under the plan, and negotiators could raise taxes on alcoholic drinks, too.

“It is a budget that is going to work for Minnesota and put Minnesotans to work,” Gov. Mark Dayton said Sunday when he announced the agreement with Democratic legislative leaders on their $38 billion, two-year budget plan that aims to raise taxes $2 billion.

Dayton, Senate Majority Leader Tom Bakk, DFL-Cook, and House Speaker Paul Thissen, DFL-Minneapolis, briefed reporters on the budget deal Sunday afternoon. The Legislature must adjourn by May 20, and the trio of leaders said House-Senate conference committees will negotiate details, such as how much the various taxes would increase.

“On the tax side, the tax committee is going to work out all the details,” Bakk said.

Bakk said the budget outline will make sure two Minnesota priorities are met: more money for education and property tax relief.

When Democrat Dayton released his budget plan in January, he called for higher sales taxes at the consumer and business levels. The idea produced protests from many segments, so he dropped them from a revised plan and pledged to oppose Senate efforts to revive the concept.

Dayton said there is nothing in the tax plan, other than a cigarette tax hike, “that will affect middle income taxpayers.”

However, after reporters pressed him, he admitted that “any tax on business, economists will say, could filter down.”

Eventually, he added about the middle class paying more: “I can’t say they won’t.”

Some of the guidelines Dayton, Bakk and Thissen said they are passing to conference committees include:

– Education at all levels would receive more than $1 million more than under the current two-year budget.

– The sales tax would not rise on consumer goods, including clothing, but businesses could pay sales tax on goods sold to other businesses.

– Income taxes would go up on people in the top 2 percent of Minnesota earners, couples with $250,000 or more annual taxable income and individuals making $150,000 or more.

– An income tax surcharge would be added for Minnesota’s richest of the rich, with proceeds going to help repay money the state has borrowed from school districts. The level of the surcharge would not be decided until the current budget ends June 30.

– Cigarette taxes would rise and taxes on alcoholic drinks also could go up.

– Some business tax breaks would disappear.

– All-day kindergarten would be funded across the state.

– The state would spend $400 million in property tax relief, such as by increasing aid sent to local governments.

Thissen said legislative pay could be raised under the budget, but the leaders did not make that decision. There also was no decision on whether to raise the gasoline tax, as the Senate voted last week.

Also awaiting a decision is how to back up lagging Vikings stadium construction funding.

The three leaders said the tax conference committee will decide the stadium issue, but Dayton said that “we have a couple ideas.”

Taxes on electronic pulltabs are far short of expectations, and there has been a demand from legislators and others to find a more reliable source of funds.

“We are going to get a stable source that is more than sufficient,” Dayton promised, without giving a hint about how that might look.

An $800 million public works funding bill, to be financed by the state selling bonds, was included in the budget framework.

House Minority Leader Kurt Daudt, R-Crown, said Republicans are not interested in that large of a bonding bill. Many Republicans have said they support renovation work on the Capitol building, but little else this year.

Daudt and Senate Minority Leader David Hann, R-Eden Prairie, said that when all Democratic-Farmer-Labor taxes are added up they could approach $3 billion in the next two-year budget cycle.

If Democrats vote together, Republicans do not have the votes to stop any spending or tax bill other than bonding.

Hann, Daudt

Legislative notebook: Sunday sales fail

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By Don Davis

Another year, another defeat for Sunday liquor sales.

The Minnesota House voted 106-21 Wednesday to retain state law forbidding Sunday liquor store hours. The issue arises regularly in the Legislature, always failing by a large amount.

The vote came on an amendment to a broader liquor bill that generally authorizes liquor sales at specific stadiums, bars and other local sites. The overall bill passed 103-24.

Most debate centered on the Sunday provision, which also would have allowed liquor store sales on Thanksgiving Day and Christmas Eve.

“Minnesotans want this amendment,” said Rep. Steve Drazkowski, R-Mazeppa. “Let’s vote on behalf of the people.”

Others, including Rep. Bob Barrett, R-Lindstrom, said because liquor stores essentially would be forced to be open seven days a week, consumers would absorb higher costs the stores would incur.

Drazkowski said three bridges in or near his district that go to Wisconsin provide routes for Minnesotans to buy liquor in stores there. He said up to 40 percent of Wisconsin border stores’ Sunday sales come from Minnesotans.

Author of the Sunday sales amendment, Rep. Tina Liebling, DFL-Rochester, said the state tells only car dealers and liquor store owners they must be closed on Sundays.

“We believe that competition is a good thing,” Liebling said. “That is what we do for most retail and most services.”

All have needs

Democratic House and Senate leaders sat down Wednesday with Democratic Gov. Mark Dayton, then the governor visited rank and file Democratic legislators as they look at how to end the legislative session by May 20.

“Like any negotiations, even negotiations back in your family, they work best when everybody gets a little something that they want, and I think that will be the final outcome of this session, too,” said Senate Majority Leader Tom Bakk, DFL-Cook. “Both the House, the Senate and the governor will get the things that are really important to them, but there’s going to be serious reinvestment back into our educational system and property tax relief at the conclusion of this session.”

House-Senate conference committees began dealing with a variety of budget issues Wednesday, but decisions can’t be made until Dayton and legislative leaders agree on how much to spend in areas such as health care, public safety and education.

While the conference committees work to merge spending plans by the House, Senate and governor, legislators are expected to deal with nonbudget issues.

On Friday, the House is expected to debate a bill that would raise the state’s minimum wage. The bill then would head to the Senate, which has a smaller raise planned.

No vote on a bill allowing gay marriage is expected this week. There are questions about whether any bill to change gun laws will come in front of the full House and Senate.

A Senate committee on Wednesday discussed some public works projects, but it remained unclear whether senators will debate a so-called bonding bill this session.

Kriesel urges marriage vote

Former state Rep. John Kriesel, R-Cottage Grove, is featured on a television commercial supporting gay marriage.

The advertisement came out this week as the Minnesota Legislature apparently prepares to vote on overturning existing state law banning same-sex marriage. The Kriesel spot urges Minnesotans to contact their legislators and ask them to vote for the repeal.

“Like many Minnesotans, Rep. Kriesel’s personal experiences are what brought him to the conclusion that loving and committed same-sex couples deserve the freedom to marry,” said Richard Carlbom, Minnesotans United campaign manager. “In the next three weeks, the Minnesota Legislature has the historic opportunity to make Minnesota a more fair and free state by including same-sex couples and their families in marriage.”

‘Mind-numbing’ taxes

The president of the Minnesota Family Council calls Democratic-proposed tax increases “mind-numbing.”

“It’s incredible what is being proposed,” Tom Prichard said. “The tax increase proposals are the equivalent of a $1,400 to $2,000 tax increase on the family of four. While the proposals target higher income earners, these figures point out the immensity of the proposed tax increases.”

All three proposals call for raising about $2 billion in new taxes.

No sand mining ban

A bill regulating sand mining in southeastern Minnesota will not ban the activity from near trout streams when it reaches the full Senate.

While the issue still could arise during Senate debate on the bill, the Finance Committee turned down a proposal that would have kept sand mining away from trout streams. Republicans and Iron Range Democrats joined to defeat the plan in the committee.

Pot bill coming

A bill is to be introduced today allowing medical marijuana in Minnesota.

Rep. Carly Melin, DFL-Hibbing, and Sen. Scott Dibble, DFL-Minneapolis, are prime sponsors of the measure, which has co-sponsors from both parties.

Supporters say marijuana should be used to help seriously ill people ease pain or help treat their conditions.

Radon info required

The House passed a bill 79-47 Thursday that, among other things, requires real estate agents to provide information about radon to new homeowners.

At least a third of Minnesota homes have radon levels that put residents at risk, said Rep. Carolyn Laine, DFL-Columbia Heights. Radon can cause cancer.

Rep. Steve Drazkowski, R-Mazeppa, said he worries that government would make more home-selling requirements. He suggested next might be warnings about bats because they may carry rabies.

The bill also makes it a misdemeanor for body artists, such as those who apply tattoos, to practice without a license.

Update: Tax routes outlined

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Hann

By Danielle Killey

Minnesota lawmakers now have three distinct tax proposals to consider with release of a Senate Democratic plan that includes an income tax hike, sales tax changes and property tax relief.

Senate Democrats unveiled a proposal Tuesday that would increase income tax for married Minnesota couples who make about $141,000 or more taxable income. They also would lower the sales tax rate while expanding what is taxed to include clothing and other goods and some services.

The proposal does not create a new income tax bracket, like the governor’s and House’s proposals, but would increase the top tax rate from 7.85 percent to 9.4 percent. That would bring in $1.2 billion of the $1.8 billion new revenue the state would net under the total tax plan.

“When this bill becomes law, we will accomplish the goals of the session, to balance the budget over the next four years,” Tax Committee Chairman Rod Skoe, DFL-Clearbrook, said.

Minnesota has a projected $627 million deficit for the next two years and lawmakers want to boost education and other spending.

The third tier change would affect about 6 percent of Minnesota taxpayers directly, Skoe said.

The plan would reduce the state sales tax more than a percentage point and tax clothing and other goods and services. It is a scaled-down version of a sales tax proposal Democratic Gov. Mark Dayton made, then dropped in the face of strong legislative and public opposition.

“The philosophy was really to modernize the tax system,” Skoe said. “This matches the purchasing patterns of Minnesota.”

“It’s bringing stability to the sales tax system,” Sen. Ann Rest, DFL-New Hope, said.

Lower income earners would get a credit on their income taxes to help offset the clothing tax cost, Rest said.

Skoe proposes increasing the cigarette tax, also included in the House and governor’s plans. The Senate bill does not include an alcohol tax House members propose.

Skoe’s plan includes updates to the Local Government Aid formula and more state money for cities, counties and townships. It would eliminate state sales taxes cities and counties pay.

“We’re trying to attack property taxes at the source” with the changes, Skoe said. “I think there’s significant property tax relief in here.”

Republicans said the bill would hurt middle class Minnesotans.

“This is not a tax on the wealthy, it’s a tax on everybody,” Senate Minority Leader David Hann, R-Eden Prairie, said. “Before we raise another dime in taxes from Minnesotans, we should be going line-by-line through our state budget and cut wasteful government spending.”

House Majority Leader Erin Murphy, DFL-St. Paul, said there is not much support for the Senate tax bill among House Democrats.

“There is a lot of support for the proposal we put forth,” she added, which she said was drawn up after talking to Minnesotans.

The House bill would create a fourth tier rate of 8.49 percent for couples making more than $400,000 a year in taxable income and add a temporary surcharge on couples’ income more than $500,000.

The governor’s plan would tax couples making more than $250,000 at 9.85 percent.

Sen. Julianne Ortman, R-Chanhassen, said Democrats have sold their income tax increase as only affecting the wealthy, but the Senate proposal does more than that.

“To the extent that there was an effort to tax the rich, I think this is not it. This is a failure,” she said. “It’s a huge imposition on middle class taxpayers.”

Skoe said fellow Democrat senators had questions, but the plan generally was well received.

“It will pass,” Rest said.

 Reporter Don Davis contributed to this report.

 —-

These are some highlights of the bill.

– Third tier income tax rate increase to 9.4 percent from 7.85 percent; affects married couples making $140,960 or more taxable income

– Lower sales tax rate to 5.675 percent from 6.785 percent while taking more

– Increase the current $1.23-cent cigarette tax by 94 cents per pack

– $80 million more in Local Government Aid, $40 million more in county aid and $5 million for township aid

– Greater Minnesota internship program tax credit established

Senate Democrats eye higher taxes on $140,000 and more income

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Skoe

By Danielle Killey

Married Minnesota couples who make about $140,000 or more taxable income would pay higher income taxes under a tax plan offered by senators today.

The proposal does not create a new income tax bracket, like the governor’s and House’s proposals, but would increase the top tax rate from 7.85 percent to 9.4 percent. That would bring in about $1.2 billion.

“This is the bill that is going to balance the state budget,” Tax Committee Chairman Sen. Rod Skoe, DFL-Clearbrook, said.

The plan would reduce the state sales tax to 5.7 percent from 6.87 percent and tax more items and services, such as clothing. Skoe also proposed increasing the cigarette tax to 94 cents per pack.

Republicans said the bill would hurt middle class Minnesotans.

“This is not a tax on the wealthy, it’s a tax on everybody,” Senate Minority Leader David Hann, R-Eden Prairie, said.

House Majority Leader Erin Murphy, DFL-St. Paul, said there is not much support for the Senate tax bill among House Democrats.

“There is a lot of support for the proposal we put forth,” she said, which she said was drawn up after talking to Minnesotans.

The House bill would create a fourth tier rate of 8.49 percent for couples making more than $400,000 a year in taxable income and add a temporary surcharge on couples’ income more than $500,000.

Skoe said he wants the committee to vote on the bill Wednesday, the same day the full House is expected to debate its tax plan.